Probate & Trust Law Section Conference Manual ... - Minnesota CLE

cannot establish a SupplementalNeedsTrust for himself or herself. A spouse is similarly
prohibited from establishing a SupplementalNeedsTrust for a spouse with a disability. A
SupplementalNeedsTrust is, after all, a third party Trust so the person with the disability and his
or her spouse, who is legally obligated to pay for the medical expenses of the spouse with a
disability (see, Minn.Stat. § 519.05(a)), are not allowed to establish such a Trust. In addition,
the statute intentionally prohibits anyone with a tort or other liability responsibility to be
treated as a third party. This avoids, for example, a defendant in a personal injury action
(ostensibly a “third party”) from establishing a SupplementalNeedsTrust and avoiding the
requirement to repay the State for Medical Assistance benefits required for a valid
SpecialNeedsTrust. Note, however, that this “anyone obligated to pay any sum for damages or
any other purpose” language is qualified by the fact that this obligation must arise “under the
terms of a settlement agreement or judgment.” As a result, this limitation on who may
establish a SupplementalNeedsTrust does not reach parents of minor children with an
obligation of support.
c. Established for a Person with a Disability
A common feature for all Supplemental and SpecialNeedsTrusts is a beneficiary who meets the
definition of a person with a disability. If the person does not meet this definition, the
Supplemental or SpecialNeedsTrust will not provide for the exclusion of assets for Medical
Assistance or SSI.
i. Certified vs. Certifiable
For a SupplementalNeedsTrust, the person must be certified as a person with a disability “prior
to” creation of the Trust. In general, a Trust is created in the eyes of Medical Assistance based
on the date appearing on the written instrument but is a testamentary Trust is “created” when
the Will is drafted of when the testator dies? A testamentary Supplemental Needs Trust runs
the risk of finding that itsbeneficiary is not certified as disabled at the time of its “creation” and
that it is not a valid Supplemental Needs Trust. Better practice is to establishinter vivos, rather
than testamentary, SupplementalNeedsTrusts when the disability status of the beneficiary is
known and the trust will remain grandfathered if the statutory authority for Supplemental
Needs Trusts is amended or repealed.
For a SpecialNeedsTrust, the person must be disabled, as defined by the Social Security Act, at
the time the Trust is created. The individual need not be certified as disabled at the moment of
creation, but they must be found to have been disabled as of that date or earlier. When the
Social Security Administration makes a determination of disability, it will always set a date for
the onset of that disability. As a result, it is possible to create a SpecialNeedsTrust before the
individual is certified by Social Security but there needs to be a great deal of certainty that the
disability definition will be met and that when the certification is finally received, it will set the
onset of the disability prior to the date of the Trust.
9 Supplemental & Special Needs Trust Basics | Jeffrey W. Schmidt