Special Needs Trusts in Minnesota: How to Protect Inheritances and Disability Benefits
Families often ask how to leave an inheritance to a loved one with special needs without losing vital benefits. When a person receives government assistance, any unexpected inheritance or financial windfall can cause those benefits to stop. Special needs trusts in Minnesota help solve this problem, allowing your loved one to keep public benefits while still benefiting from your legacy.
Why Special Needs Planning Matters
The State of Minnesota and federal programs such as Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) have strict income and asset limits. If a person receiving these benefits inherits money directly, the government can suspend or terminate their coverage. This could mean losing access to healthcare or housing assistance overnight.
A properly drafted Special Needs Trust protects those benefits. The trust owns the assets instead of the individual, keeping them below eligibility limits. The Minnesota Department of Human Services explains that these trusts allow families to provide comfort, security, and a better quality of life without jeopardizing public assistance.
How Special Needs Trusts Work
With this type of trust, a trustee manages the assets for the benefit of a disabled individual. The trustee pays for needs that government programs don’t cover, such as education, recreation, transportation, or specialized care. Because the assets remain in the trust, they do not count toward the beneficiary’s income or resource limits.
According to the Social Security Administration, trusts like these are one of the safest ways to preserve SSI and Medicaid eligibility. They ensure funds are available to improve daily living without affecting critical government support.
Supplemental Needs Trusts vs. Special Needs Trusts
Although the terms are often used interchangeably, they have key differences. A first-party Special Needs Trust uses the beneficiary’s own money, such as lawsuit proceeds or an inheritance received directly. A third-party Supplemental Needs Trust is funded by family members or friends for the benefit of someone with disabilities. Both options serve the same goal—keeping benefits intact while providing financial security.
The National Academy of Elder Law Attorneys notes that these trusts can be tailored to each person’s situation. They can fund therapy, home modifications, transportation, and other essentials that government programs may not cover. With proper setup, families can ensure care continues long after they are gone.
How Metropolitan Law Group Helps
At Metropolitan Law Group, we help Minnesota families design trusts that protect inheritances and safeguard eligibility for crucial programs. Our attorneys regularly create Special Needs and Supplemental Needs Trusts that comply with Minnesota and federal regulations. We coordinate with caseworkers and financial institutions to make sure everything works smoothly.
Our team also helps families document their intentions—whether that means setting spending guidelines, appointing trustees, or adding a letter of intent to describe how funds should be used to improve the beneficiary’s life.
Secure Your Loved One’s Future
Planning ahead ensures your gift provides comfort without cutting off vital support. With the right trust, your loved one keeps their healthcare, housing, and benefits while enjoying a better quality of life.
To learn how special needs trusts in Minnesota can protect your family, book a complimentary 15-minute Discovery Call with our experienced staff. You can also call 612-448-9653 to talk with our team at Metropolitan Law Group today.
