How Can Our Family Spend Money That’s in a Special Needs Trust?

A Special Needs Trust can hold money or title to property for the benefit of a disabled individual. The funds need to be used to supplement benefits received from government programs such as Medicaid and Supplemental Security Income (SSI). However, it is important to understand what type of purchases are allowed – and which are not – so that these critical benefits are protected..

 

Funds in a Special Needs Trusts can be used for:  :

  • medical and dental expenses
  • eye glasses
  • annual check-ups
  • transportation (including vehicle purchase)
  • medical equipment
  • training programs
  • maintenance
  • education
  • insurance (including payment of premiums)
  • rehabilitation

In some cases, funds in a Special Needs Trust can  pay for:

  • entertainment such as movies
  • electronic equipment
  • trips and vacations
  • computer equipment
  • athletic training and competitions
  • companion services/home heath aid
  • other items related to self-esteem such as hair cuts

Special Needs Trusts are designed to supplement, not replace, the kind of basic support provided by government programs such as Medicaid and Supplemental Security Income (SSI). Special Needs Trusts can be used for comfort and luxuries that cannot be paid for by using government benefits. However, if trust funds are used for housing and food , or if funds are distributed directly to the beneficiary, these payments will count as income to the beneficiary. This willimpact the individual’s eligibility for Medicaid and SSI. Therefore, it is critical to also understand what NOT to use trust funds for.

If the beneficiary receives government benefits, here are some basic expenses that should not be paid through a Special Needs Trust without talking to your special needs attorney:

  • cash given directly to the beneficiary for any purpose
  • food or groceries
  • restaurant meals (except if given as an occasional gift)
  • rent or mortgage payments
  • property taxes
  • homeowners or condo association dues
  • homeowners insurance if the insurance is a mortgage requirement
  • utilities such as electricity, gas, and water
  • utilities hookup or connection charges

Keep in mind that while many of these payments will cause a one-third reduction in SSI benefits, the trustee may determine that the benefit of the trust making these payments far outweighs the loss of income. That’s why it is  important to talk to your lawyer when weighing the pros and cons of expenditures. .

Understanding how best to financially support an individual with special needs can be very complicated, and if your loved one depends upon government benefits, please seek help from a qualified Special Needs Planning Attorney before taking an action that jeopardizes their financial future.  If you need assistance, please call the Law Office of Sheri R. Abrams at (571) 328-5795 to schedule an appointment..