What is a Supplemental Needs Trust Bond?
A supplemental needs trust bond is a type of surety bond that provides protection for the beneficiary of a supplemental needs trust. In the event that funds are stolen or mismanaged by a fiduciary overseeing a trust, or if fraud takes place, the supplemental needs trust bond will provide financial recompense for the protected person.
What is a Supplemental Needs Trust?
A supplemental needs trust is a trust that is commonly set up using a third party’s funds. The third party could be a parent, grandparent, etc.
Supplemental needs trusts are similar to special needs trusts, but they differ in that they are a third-party trust, meaning they are set up most commonly by a donor using their funds (unlike special needs trusts, which are a first-party trust). Supplemental trusts are vague in terms of the limitations placed on how the money within them can be spent. These trusts can be useful for supplying supplemental needs to a person living with a disability while still allowing that person to qualify for and receive additional governmental benefits from various programs, including Medicare and Social Security.
The money contained with supplemental needs trusts is meant to pay for the “supplemental needs” of a protected person. They cannot be used to pay for the basic needs of a protected person, such as food, taxes, rent/mortgage and other day-to-day living expenses.
How Supplemental Needs Trust Bonds Work
When setting up a supplemental needs trust with a third party’s money, the court will often require a supplemental needs trust bond. These bonds act as insurance for the beneficiary of a supplemental needs trust by protecting the beneficiary against fraud, theft, or financial mismanagement committed by the fiduciary of the trust. Through the court, they provide protection based on the rules of the trust.
Obtain a Supplemental Needs Trust in Minnesota
If you are looking to set up a supplemental needs trust in Minnesota and are being required to obtain a supplemental needs trust bond, contact the surety experts at The Patrick J. Thomas Agency today.