2006 Minnesota Statutes

501B.89 TRUST PROVISIONS LINKED TO PUBLIC ASSISTANCE ELIGIBILITY;
SUPPLEMENTAL NEEDS TRUSTS.
    Subdivision 1. Trusts containing limitations linked to eligibility for public assistance. (a)
Except as allowed by subdivision 2 or 3, a provision in a trust that provides for the suspension,
termination, limitation, or diversion of the principal, income, or beneficial interest of a beneficiary
if the beneficiary applies for, 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 Minnesota family
investment program 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.
    Subd. 3. Supplemental needs trusts under federal law. A trust created on or after August
11, 1993, which qualifies as a supplemental needs trust for a person with a disability under United
States Code, title 42, section 1396p(c)(2)(B)(iv) or 1396p(d), as amended by section 13611(b)
of the Omnibus Budget Reconciliation Act of 1993, Public Law 103-66, commonly known as
OBRA 1993, is enforceable, and the courts of this state may authorize creation and funding of
a trust which so qualifies.
History: 1992 c 513 art 7 s 129; 1993 c 108 s 1; 1995 c 207 art 6 s 108,109; 1999 c 159 s 134