People in Minnesota who have a disabled child might need to create a special needs trust as part of an estate plan. There is a limit on how much an individual can own in assets while still drawing government benefits, and a special needs trust can ensure that the person can access the assets without owning them.
An individual with special needs who receives an inheritance that is not placed in a trust has a short amount of time in which to set up a pooled disability trust to protect the money. However, in addition to placing this burden on the recipient, passing assets down to go to a pooled disability trust means that after the death of the person with special needs, Medicaid must be repaid. If there is anything left, this can go to another beneficiary. If a special needs trust is established from the outset, it is not necessary to pay back Medicaid, and all remaining assets after the death of the person with special needs can go to another beneficiary.
A trustee must be appointed to manage the trust, and some people may want there to be an advocate as well who understands the needs of the beneficiary and the goals of the trust creator. An attorney may help in creating the trust.
The assets in the special needs trust do not have to pass through probate and can be made available to the beneficiary immediately. Some people might want to set up trusts for other situations as well. For example, since minors cannot inherit property, trusts must be set up for them. If a beneficiary might be irresponsible with an inheritance, a trust could be set up to only make distributions at certain times or when the trustee deems it reasonable.