Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                         CHAPTER 108-S.F.No. 44 
           An act relating to trusts; making certain trust 
          provisions related to public assistance eligibility 
          unenforceable as against public policy; clarifying 
          availability of trusts in determining eligibility for 
          medical assistance and other benefit programs; 
          defining supplemental needs trusts; clarifying 
          enforceability of supplemental needs trusts; amending 
          Minnesota Statutes 1992, section 501B.89. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
     Section 1.  Minnesota Statutes 1992, section 501B.89, is 
amended to read: 
    501B.89 [EXCULPATORY CLAUSES TRUST PROVISIONS LINKED TO 
PUBLIC ASSISTANCE ELIGIBILITY UNENFORCEABLE; SUPPLEMENTAL NEEDS 
TRUSTS.] 
    Subdivision 1.  [TRUSTS CONTAINING LIMITATIONS LINKED TO 
ELIGIBILITY FOR PUBLIC ASSISTANCE.] (a) Except as allowed by 
subdivision 2, a provision in a trust created after July 1, 
1992, purporting to make assets or income unavailable to a 
beneficiary that provides for the suspension, termination, 
limitation, or diversion of the principal, income, or beneficial 
interest of a beneficiary if the beneficiary applies for or, is 
determined eligible for, or receives public assistance or 
benefits under a public health care program is unenforceable as 
against the public policy of this state, without regard to the 
irrevocability of the trust or the purpose for which the trust 
was created. 
    (b) This subdivision applies to trust provisions created 
after July 1, 1992.  For purposes of this section, a trust 
provision is created on the date of execution of the first 
instrument that contains the provision, even though the trust 
provision is later amended or reformed or the trust is not 
funded until a later date.  
    Subd. 2.  [SUPPLEMENTAL TRUSTS FOR PERSONS WITH 
DISABILITIES.] (a) It is the public policy of this state to 
enforce supplemental needs trusts as provided in this 
subdivision. 
    (b) For purposes of this subdivision, a "supplemental needs 
trust" is a trust created for the benefit of a person with a 
disability and funded by someone other than the trust 
beneficiary, the beneficiary's spouse, or anyone obligated to 
pay any sum for damages or any other purpose to or for the 
benefit of the trust beneficiary under the terms of a settlement 
agreement or judgment. 
    (c) For purposes of this subdivision, a "person with a 
disability" means a person who, prior to creation of a trust 
which otherwise qualifies as a supplemental needs trust for the 
person's benefit: 
    (1) is considered to be a person with a disability under 
the disability criteria specified in Title II or Title XVI of 
the Social Security Act; or 
     (2) has a physical or mental illness or condition which, in 
the expected natural course of the illness or condition, either 
prior to or following creation of the trust, to a reasonable 
degree of medical certainty, is expected to: 
     (i) last for a continuous period of 12 months or more; and 
     (ii) substantially impair the person's ability to provide 
for the person's care or custody. 
    Disability may be established conclusively for purposes of 
this subdivision by the written opinion of a licensed 
professional who is qualified to diagnose the illness or 
condition, confirmed by the written opinion of a second licensed 
professional who is qualified to diagnose the illness or 
condition. 
    (d) The general purpose of a supplemental needs trust must 
be to provide for the reasonable living expenses and other basic 
needs of a person with a disability when benefits from publicly 
funded benefit programs are not sufficient to provide adequately 
for those needs.  Subject to the restrictions contained in this 
paragraph, a supplemental needs trust may authorize 
distributions to provide for all or any portion of the 
reasonable living expenses of the beneficiary.  A supplemental 
needs trust may allow or require distributions only in ways and 
for purposes that supplement or complement the benefits 
available under medical assistance, Minnesota supplemental aid, 
and other publicly funded benefit programs for disabled 
persons.  A supplemental needs trust must contain provisions 
that prohibit disbursements that would have the effect of 
replacing, reducing, or substituting for publicly funded 
benefits otherwise available to the beneficiary or rendering the 
beneficiary ineligible for publicly funded benefits. 
    (e) A supplemental needs trust is not enforceable if the 
trust beneficiary becomes a patient or resident after age 64 in 
a state institution or nursing facility for six months or more 
and, due to the beneficiary's medical need for care in an 
institutional setting, there is no reasonable expectation that 
the beneficiary will ever be discharged from the institution or 
facility.  For purposes of this paragraph "reasonable 
expectation" means that the beneficiary's attending physician 
has certified that the expectation is reasonable.  For purposes 
of this paragraph, a beneficiary participating in a group 
residential program is not deemed to be a patient or resident in 
a state institution or nursing facility.  
    (f) The trust income and assets of a supplemental needs 
trust are considered available to the beneficiary for medical 
assistance purposes to the extent they are considered available 
to the beneficiary under medical assistance, supplemental 
security income, or aid to families with dependent children 
methodology, whichever is used to determine the beneficiary's 
eligibility for medical assistance.  For other public assistance 
programs established or administered under state law, assets and 
income will be considered available to the beneficiary in 
accordance with the methodology applicable to the program. 
    (g) Nothing in this subdivision requires submission of a 
supplemental needs trust to a court for interpretation or 
enforcement. 
    (h) Paragraphs (a) to (g) apply to supplemental needs 
trusts whenever created, but the limitations and restrictions in 
paragraphs (c) to (g) apply only to trusts created after June 
30, 1993.  
    Sec. 2.  [EFFECTIVE DATE; APPLICATION.] 
    Section 1 is effective retroactive to July 1, 1992. 
    Notwithstanding the provisions of section 1, subdivision 2, 
providing that a supplemental needs trust may not be funded by 
the beneficiary or a person obligated to pay the beneficiary 
under a settlement agreement or judgment, a supplemental needs 
trust may be established with the proceeds of payments made by 
the social security administration pursuant to the United States 
Supreme Court decision in Sullivan v. Zebley, 110 S.Ct. 885 
(1990). 
    Presented to the governor May 6, 1993 
    Signed by the governor May 7, 1993, 2:44 p.m.