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

Assistance benefits paid on behalf of the individual beneficiary. 42 U.S.C. § 1396p(d)(4)(A). The
Minnesota Department of Human Services allows for the payment of administrative expenses
provided they are reasonable and approved by the Department of Human Services, or by a
Court with advance Notice to the Department of Human Services. HCPM § 19.25.35.20.
The Social Security Administration now requires that the reimbursement language in a
SpecialNeedsTrust provide for all States that might pay Medical Assistance benefits, not just the
State where the Trust was created. POMS PS 01825.026. The Social Security Administration
only considers two types of administrative expenses as valid for purposes of complying with the
reimbursement requirement for SpecialNeedsTrust. The Trust can only provide for payment of
taxes due from the Trust to the state(s) or federal government because of the death of the
Trustbeneficiary and reasonable fees for administration of the Trust estate such as an
accounting of the Trust to a court, completion and filing of documents, or other required
actions associated with termination and wrapping up of the Trust. POMS SI 01120.203(B)(3)(a).
All of these items, for both the Department of Human Services and the Social Security
Administration must be clearly stated in the Trust agreement to qualify as a SpecialNeedsTrust.
ii.
Pooled SpecialNeedsTrust Payback
Pooled SpecialNeedsTrusts have traditionally been allowed to operate as SpecialNeedsTrusts
with the possibility that the Trust itself will retain all of the assets in an individual beneficiary’s
account upon that beneficiary’s death. The federal law giving Pooled Trusts their existence
provides that only amounts not retained by the Pooled Trust are subject to the
SpecialNeedsTrust reimbursement provision. 42 U.S.C. § 1396p(d)(4)(C). Effective for all Pooled
SpecialNeedsTrust accounts created on or after January 1, 2011, however, new provisions in
Minnesota Statutes, section 256B.056, subdivision 3b provide:
(c)
(d)
For purposes of paragraph (d), a pooled Trust means a Trust established under United
States Code, title 42, section 1396p(d)(4)(C).
A beneficiary’s interest in a pooled Trust is considered an available asset unless the
Trust provides that upon the death of the beneficiary or termination of the Trust during
the beneficiary’s lifetime, whichever is sooner, the department receives any amount, up
to the amount of medical assistance benefits paid on behalf of the beneficiary,
remaining in the beneficiary’sTrust account after a deduction for reasonable
administrative fees and expenses, and an additional remainder amount. The retained
remainder amount of the subaccount must not exceed ten percent of the account value
at the time of the beneficiary’s death or termination of the Trust, and must only be used
for the benefit of disabled individuals who have a beneficiary interest in the pooled
Trust.
22 Supplemental & Special Needs Trust Basics | Jeffrey W. Schmidt