Inactive Trusts

The Inactive Trust allows for pre-planning of future deposits—from life insurance, wills, or settlements.  Family members, friends, and even the Beneficiary can open a trust sub-account within the Inactive Trust. 

An initial deposit of $200 along with the applicable trust agreement documents are required to establish an Inactive Trust. $100 is for an enrollment fee and the remaining $100 will be deposited into the Inactive Trust sub-account. 

The sub-account remains inactive; no fees and no investments, until a deposit is received. After a deposit is received, the sub-account is moved to the appropriate active trust.  At that time, the remining enrollment fee will be assessed, the funds will be invested per MSNT Investment Policy, and all applicable fees will be assessed. There is no transfer penalty or look-back period applied to funds deposited to this trust. No Medicaid payback is required.

By utilizing the Inactive Trust option, Donors have the ability to plan for their loved one; helping ensure there is no impact to the Beneficiary’s public benefits.

These are some effective ways the trust can be funded. All of these require advance planning to ensure the Inactive Trust is named as Beneficiary. In doing so, the funds become part of the special needs trust instead of being paid to the Beneficiary and negatively impacting their current or potential public benefits.


        • Using a trust or will: Individuals can create or amend a separate trust to contain provisions to make a distribution to the special needs trust.
        • Using life insurance: The special needs trust can be named as the Beneficiary of life insurance policies such as a second to die, whole life or term life insurance.
        • Using 401(k) or IRA retirement accounts: A 401(k) can be liquidated, and the cash proceeds deposited to the trust. A traditional IRA can be inherited and transferred to Beneficiary’s special needs trust. MSNT will assist with the transfer and administration of Required Minimum Distributions.
        • Sale proceeds of a house: MSNT will assist the executor or personal representative with depositing funds to the trust once the home is sold. This option is often used as an alternative to leaving a Beneficiary with the burden of the maintenance and upkeep of a home.
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