What is a special needs trust?

A special needs trust is a type of estate planning tool used to provide financial assistance for people with special needs or disabilities. A special needs trust is a legal agreement which allows an individual or family to provide for the future needs of someone with special needs while preserving their eligibility for public benefits programs, such as Medicaid and Supplemental Security Income (SSI). In Minnesota, special needs trusts are governed by the Minnesota Statutes Annotated, Section 524.6-670. This law provides that a special needs trust may be established by a third party, such as a parent, grandparent, relative, or friend, to provide for a disabled beneficiary or a person with special needs. The trust must be created for a charitable, educational, or medical purpose and must be approved by the court. The trust must also include certain provisions such as: providing for payments during the beneficiary’s lifetime to meet expenses that are not covered by public benefits programs; specifying how the trust funds will be managed and distributed upon the death of the beneficiary; and making sure that the trust funds are not used for purposes other than those specified in the trust agreement. In Minnesota, the court must review and approve any special needs trust. The court can approve or deny the trust based on the trust’s purpose and whether it is in the best interest of the beneficiary. The court also looks at a variety of other factors, such as the amount of money in the trust, the trustees’ qualifications, and the trust’s appropriateness for the beneficiary’s current and future circumstances.

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