What is a Special Needs Trust Bond?
A special needs trust bond is a type of surety bond that provides insurance for a protected person who has had a special needs trust set up in their name. It protects a person from fraud, mismanagement or other unethical actions that take place. They are generally required in Minnesota and other states when a person sets up a special needs trust.
What is a Special Needs Trust?
A special needs trust is a court supervised trust that is generally set up to shelter the assets of a protected person and allow them to qualify for certain benefits and assistance provided by the federal government through Medicaid, Social Security, and other programs. The beneficiary of a special needs trust must be under 65.
The funds that are placed within a special needs trust can safely and slowly be spent down over the years without having to reduce them quickly in order to qualify for certain types of aid. But money that is placed within a special needs trust cannot be spent on anything. There are several limitations that are placed on the funds. Money contained within a special needs trust can only be spent on the “special needs” of the protective person. These can include:
- Customized transportation (wheelchair vans, etc.)
- Occupational and physical therapy
- Special housing needs
- Therapy equipment for the home
- Extended therapy stays in a hospital
Special needs trust funds are not meant to pay for the “basic day-to-day needs” of a person, as these needs are meant to be paid for by government assistance. These can include:
- Food and groceries
- Rent and mortgage
- Property taxes and association dues
- Homeowners and renter’s insurance
- Cash gifts to the beneficiary
Special exception can be made in certain situations.
How Special Needs Trust Bonds Work
A special needs trust bond is generally required by the courts in order to establish a special needs trust. These bonds are generally required to be obtained by the person acting the fiduciary for the special needs trust. If the fiduciary is a guardian or conservator for the protected person, they can be the person who act as the fiduciary. The special needs trust bond ensures that the fiduciary will manage the trust properly and protects the protected person’s assets from financial mismanagement, fraud and theft. If anything happens to the trust or the assets within it, a claim can be made against the bond and the protected person will be able to receive a payout.
Obtain a Special Needs Trust Bond in Minnesota
If you are looking to set up a special needs trust in Minnesota, you will likely be required to obtain a special needs trust bond. The surety experts at The Patrick J. Thomas Agency has decades of experience working with special needs trust bonds. Contact us today.