What can a special needs trust not pay for? Think before making one.

When it comes to planning for the future of a loved one with special needs, a special needs trust can be a valuable tool. It allows individuals with disabilities to have funds available to enhance their quality of life without jeopardizing their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI). However, it's important to understand What can a special needs trust not pay for?

In this article, we will explore what these expenses are and why it's crucial to work with a special needs trust attorney to navigate this complex area of law.

Basic Expenses Covered by Public Benefits

Public benefit programs like Medicaid and SSI provide essential support for individuals with disabilities by covering basic expenses such as medical care, food, clothing, and shelter. 

Special needs trusts, on the other hand, are designed to supplement, not replace, these benefits. This means that certain expenses should be covered by public benefits instead of the trust. 

It's important to consult with a special needs planning attorney to ensure compliance with the rules and regulations governing these benefits.

Here are some basic expenses that should not be paid through a special needs trust without consulting a special needs attorney:

• 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
• A utility hookup or connection charges

While these expenses are typically covered by public benefits, it's important to note that some payments may result in a reduction in SSI benefits. The trustee of the special needs trust should carefully consider the impact of these payments on the beneficiary's eligibility for government benefits and work closely with a special needs trust attorney to make informed decisions.

Expenses Covered by a Special Needs Trust

While there are limitations on what a special needs trust can pay for, there are also many expenses that can be covered by the trust to enhance the beneficiary's quality of life. These expenses go beyond the necessities and can provide comfort, support, and opportunities for individuals with disabilities. Here are some examples of expenses that can be covered by a special needs trust:

• Medical and dental expenses not covered elsewhere
• Equipment like wheelchairs or specially equipped vans
• Therapy or rehabilitation services
• Training and Education
• Vacation and travel expenses, including the cost of a companion
• Assistance with starting a business
• Home Furnishings
• Recreation and entertainment, such as summer camp, movies, social events, and sports equipment
• Electronic equipment, appliances, and computers
• Payments for a companion
• Legal or guardianship expenses
• Insurance
• Burial expenses

It's important to note that the specific expenses that can be covered by a special needs trust may vary depending on the terms of the trust document. Working with a special needs planning attorney can help ensure that the trust is tailored to meet the unique needs and circumstances of the beneficiary.

What a Special Needs Trust Cannot Pay For

While a special needs trust can cover a wide range of expenses to enhance the beneficiary's quality of life, certain things should not be paid for with trust funds. These expenses include:

• Groceries: Basic food items should be covered by public benefits like SNAP (Supplemental Nutrition Assistance Program).
• Rent or mortgage payments: Housing expenses should be covered by public benefits or other sources of income.
• Cash: Trust funds should not be distributed directly to the beneficiary in the form of cash.
• Gift cards: Gift cards can be considered as cash equivalents and should be avoided.
• Condo association fees: These fees should be paid by the beneficiary using their income or public benefits.
• Property taxes: Property taxes should be paid using other sources of income or public benefits.
• Utilities, such as electricity: Utilities should be covered by public benefits or the beneficiary's income.

Trustees need to exercise caution and consult with seasoned attorneys before making any payments that may impact the beneficiary's eligibility for government benefits.

The Importance of Working with a Special Needs Trust Attorney

Navigating the complexities of special needs planning and trust administration can be overwhelming. That's why it's crucial to work with a qualified attorney who specializes in this area of law. A Special needs lawyer can provide invaluable guidance and support throughout the entire process, including:

• Understanding the rules and regulations: They have in-depth knowledge of the rules and regulations governing public benefits and can help ensure compliance.
• Drafting and administering the trust: They can help draft the trust document and ensure that it meets all legal requirements. They can also assist with trust administration, making sure that the funds are used appropriately and following the trust's provisions.
• Navigating government benefit programs: They can help families navigate government benefit programs and understand the impact of trust distributions on eligibility.
• Advocating for the beneficiary's best interests: They act as advocates for the beneficiary, ensuring that their needs and wishes are respected and protected.

By working with a special needs trust attorney, families can have peace of mind knowing that their loved one's future is in capable hands.

Conclusion

A special needs trust can be a powerful tool for ensuring the financial security and well-being of individuals with disabilities. However, it's essential to understand what expenses can and cannot be paid for with trust funds.

By working with a qualified Elder law attorney, families can navigate the complexities of special needs planning and trust administration, ensuring that their loved ones receive the support they need while preserving their eligibility for government benefits. 

Take the time to consult with a special needs trust attorney to create a plan that meets your family's unique needs and provides a brighter future for your loved one with special needs.