People with certain disabilities face a dilemma when they receive a large settlement or inheritance. Because of strict Medicaid rules, people who receive government benefits may only own a limited amount of assets in their own names. Fortunately, it may not be necessary for disabled people in Minnesota to choose between forfeiting a large sum of money or giving up their medical benefits.
By putting money in a special needs trust rather than in a personal bank account, a person who receives government benefits may be able to keep both. A special needs trust is an estate planning tool with guidelines specifically for people who receive government healthcare benefits. The trust gets managed by a trustee who ensures that the money is only used for certain expenses. In exchange for being able to keep assets in a trust, any money left over when the beneficiary dies gets transferred to the government to repay the costs of their medical care.
Family members may set up special needs trusts for a loved one's benefit. When this kind of trust is funded with assets that did not belong to the disabled person, the money left in the trust at their death does not go to the government. Elderly family members may transfer assets to a loved one's special needs trust without penalty if they need to reduce their own assets in order to qualify for government healthcare assistance.
It's important for a special needs trust to be drafted property to prevent a disabled person from losing their necessary medical care assistance. The correct type of special needs trust to use depends on where the assets originate. An attorney who focuses on estate planning may help a client with special needs transfer their assets into a trust or assist their family members in setting up a trust for their long-term care.