TERMS AND DEFINITIONS

Beneficiary

is the person benefitting from a trust.

Activities of Daily Living - ADLs

are daily, routine skills an individual needs in order to function.  Examples include:  eating, bathing, moving, toileting and grooming.

Day Training & Habilitation Program - DT&H

is a licensed organization that assists individuals with disabilities to develop and maintain life skills, participate in community life, and engage in activities of their own choosing.

Department of Human Resources - DHS

provides health care, economic assistance and other essential services for those who do not have the resources to meet their basic needs and are least able to help themselves.

Developmental Disability - DD

is a mental and/or physical condition that manifests before age 22, substantially affects functioning in several major life activities, and usually lasts through life.

Employment Network - EN

is an entity that contracts with the Social Security Administration (SSA) that provides and coordinates the delivery of necessary services to Social Security disability beneficiaries participating in the Ticket to Work program.

Formal Supports

are community supports for individuals with disabilities that are provided by services and programs.

Global Developmental Delay

is a significant lag in meeting important developmental milestones, including:  physical, cognitive, behavioral and social development.

Informal Supports

are community supports for individuals with disabilities that are provided by family, friends and social network groups.

Instrumental Activities of Daily Living - ADLs

are basic skills an individual needs in order to function.  Examples include:  shopping, managing fnances, essential household chores, planning and preparing meals.

Intermediate Care Facility for Persons with Developmental Disabilities - ICF DD

is a residential facility or licensed health care institution that provides health and rehabilitatiave services for persons with developmental disabilities or related conditinos who require active treatment.

Irrevocable Trust

is a trust that cannot be changed or cancelled after it has been created.

Medical Assistance - MA

is a publicly funded health care program for individuals who meet certain income and other criteria, including persons with disabilities.

Minnesota Department of Health - MDH

is a state agency whose mission is to protect, maintain and improve the health of all Minnesotans.

Nursing Facility - NF

is a facility or part of a facility licensed to provide nursing care for persons who are unable to properly care for themselves.

Parental Fee

is a monthly amount paid by parents of children under 18 accessing TEFRA.  It is based on family income and size.

Personal Care Assistant/Assistance - PCA

provides day-to-day assistance and support to individuals with disablities to help them be more independent in their homes and in the community.

Plan for Achieving Self Support - PASS

is a Supplemental Security Income (SSI) work initiative that lets individuals with disabilities set aside money and other assets for items or services to reach specific work goals.

Related Condition

is a condition closely related to a developmental disability that is severe, chronic, results in impairment of general intellectual functioning or adaptive behavior, requires treatment or services similar to those required for persons with developmental disabilities, manifests before age 22, is likely to continue indefinitely, is not attributable to mental illness, and results in substantial functioning limitations.

Revocable Trust

is a trust that can be changed or cancelled after it has been created.

Social Security Administration - SSA

is a federal agency that administers Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) programs.  These two major programs provide cash benefits to persons with disabilities.

Social Security Disability Income - SSDI

is a program under Retirement, Survivor and Disablity Insurance (RSDI) that provides cash benefits to individuals who have a disabilty and have worked a certain number of quarters or had a parent or spouse who worked a certain number of quarters and have paid into the Social Security System.  SSDI helps offset the costs of food, clothing and shelter with monthly benefits.

Spenddown

is an amount of money that a person enrolled in a Minnesota Health Care Program (MHCP) is required to pay before they are eligble for Medical Assistance (MA).

State Medical Review Team - SMRT

is a division of the Department of Human Services (DHS) that makes disability determinations using criteria from the Social Security Administration (SSA).

Supplemental Security Income - SSI

is a federal needs-based program for children and adults who have been been able to work or have not worked enough to pay into the Social Security System.  SSI helps to offset the costs of food, clothing and shelter with monthly benefit payments.

Tax Equity Fairness and Responsibility Act - TEFRA

is a component of Medical Assistance (MA) that helps cover health care costs for children with disabiilties.  Only the child's income is used to determine eligibility; however there may be parental fees, depending on family income and size.

Trustee

is the person or entity responsible for the management and distribution of the assets of a trust.

Trusts

A supplemental needs trust or special needs trust can be established for a person with a disability to cover certain expenses above what public programs can provide. Details on these two types of trusts are explained below, along with a comparison of the similarities and differences between them.

Supplemental Needs Trust

A Supplemental Needs Trust is established for the sole benefit of a person with a disability. The trust allows him/her to benefit from funds to cover reasonable living expenses above what public funding provides without jeopardizing eligibility for government programs, including Supplemental Security Income (SSI) and Medical Assistance (MA). The trust gives family members and others the opportunity to provide gifts or additional resources to help enhance the quality of life for the person with a disability without putting the individual at risk for losing benefits.

Definitions of terms highlighted in Green Italics can be found in the right sidebar.

A Supplemental Needs Trust is a 3rd party trust. It is not owned by the person with a disability, he/she cannot place their own funds into it or funds received from government programs, and he/she does not have control over the funds in the trust. Parents, family friends or others can place funds into the trust (see exceptions below). The beneficiary never receives funds directly from the trust. Payments are made directly to providers of goods and services. Upon the death of the beneficiary, unused funds can pass to others as designated by the trust.

A trustee establishes and manages the trust for the sole benefit of the person with the disability, called the beneficiary, and has authority in determining how and when the funds will be distributed. Some of the duties of the trustee include keeping records of all transactions; establishing bank accounts; receiving, depositing and disbursing funds; filing appropriate tax documents and paying any taxes that are due.

Criteria for a Supplemental Needs Trust

  • The trust must have been established on or after July 1, 1992
  • The trust must be established to benefit a person certified disabled before the trust was created
  • The beneficiary must be under age 65
  • The trust must be funded by someone other than:
    - The beneficiary
    - The beneficiary's spouse
    - Anyone who is required to pay an amount to or for the trust beneficiary under the terms of a settlement
  • The general purpose of the 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
  • Upon the death of the beneficiary, unused funds can pass to others as designated by the trust

IMPORTANT: A Supplemental Needs Trust is a complex document and there are strict rules on how the trust is established and used. It is recommended to seek the advice of an attorney with experience in preparing this type of trust.

More information on Supplemental Needs Trusts can be found here.

Special Needs Trust

A Special Needs Trust is established for the sole benefit of a person with a disability, called the beneficiary.   The trust allows him/her to benefit from additional income and assets to cover reasonable living expenses above what public funding provides without jeopardizing eligibility for government programs, including Supplemental Security Income (SSI) and Medical Assistance (MA).

Definitions of terms highlighted in Green Italics can be found in the right sidebar.

A Special Needs Trust is a 1st party trust.  It is created using only the assets of the beneficiary.   Upon the death of the beneficiary, the Department of Human Services (DHS) is reimbursed up to the amount paid by Medical Assistance (MA) on behalf of the beneficiary.

A trustee manages the trust for the sole benefit of the beneficiary and has authority in determining how and when the funds will be distributed.  Some of the duties of the trustee include keeping records of all transactions; establishing bank accounts; receiving, depositing and disbursing funds;  filing appropriate tax documents and paying any taxes that are due.

Criteria for a Special Needs Trust

  • The trust must be established on or after August 11, 1993
  • The beneficiary must be under age 65 at the time the trust was created
  • The trust can be revocable or irrevocable
  • The  trust must be established by the beneficiary’s parent, grandparent, legal guardian or the court
  • The trust is funded with income or assets of the beneficiary
  • The trust must contain a provision that upon the death of the person with the disability, any remaining portion of the trust equal to the amount  Medical Assistance (MA) that has been paid for the beneficiary will revert back to the Department of Human Services (DHS)
  • The beneficiary must be certified disabled at the time the trust is created

IMPORTANT:  A Special Needs Trust is a complex document and there are strict rules on how the trust is established and used. It is recommended to seek the advice of an attorney with experience in preparing this type of trust.

More information on Special Needs Trusts can be found here.

Similarities and Differences: Supplemental Needs Trusts and Special Needs Trusts

Who benefits?

Supplemental Needs Trust – is used for the sole benefit of a person with a disability to supplement living expenses provided by government programs, including SSI and MA.

Special Needs Trust – same as Supplemental Needs Trust

How is the trust funded?

Supplemental Needs Trust – is funded by someone other than the beneficiary, their spouse or anyone who is required to pay an amount to or for the trust beneficiary under the terms of a settlement.

Special Needs Trust – is funded by assets of the beneficiary.

Who establishes the trust? 

Supplemental Needs Trust – is established by someone other than the beneficiary or his/her spouse.

Special Needs Trust – is established by the beneficiary’s parent, grandparent, legal guardian or the court.

What happens after the death of the beneficiary?

Supplemental Needs Trust - upon the death of the beneficiary, unused funds can pass to others as designated by the trust.

Special Needs Trust – upon the death of the beneficiary, unused funds are paid to DHS to pay for MA benefits that have been paid.

For more information on Supplemental and Special Needs Trusts:  Guzman Law Firm, P.A.