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Governmental programs such as Medicare and Supplemental Security Income (SSI) provide necessary assistance to individuals who need care but lack the funds. Those programs help a person with disabilities afford many of the basic necessities of life, including housing and medical care. However, if a person earns too much income, or is gifted too much money or assets, they can lose out on their eligibility for these needs-based programs.
Special needs trusts (SNTs) provide a useful solution. By properly utilizing an SNT, you can provide for yourself or a loved one with a disability, without ruining their eligibility for needs-based governmental assistance. SNTs must be used properly, and benefits from the fund must be used only for proper items, in order to avoid affecting governmental assistance eligibility. Continue reading for a discussion of the items that special needs trusts can and cannot be used to cover, and reach out to a dedicated West Palm Beach special needs trust attorney for advice and assistance.
It is, perhaps, easier to list the items that special needs trust funds cannot be used to pay for than what they can be used for. SNTs are meant to cover additional expenses that government assistance programs are not already paying for. Disbursing trust funds directly to the beneficiary may constitute income, and paying for certain kinds of expenses directly may be considered in-kind support and maintenance (ISM). ISM can be counted by the government to reduce SSI and other benefits, and may even cause the beneficiary to lose out on such benefits entirely. With proper advice by a special needs attorney, there may be circumstances where it is appropriate & preferable to use the SNT for ISM & take a reduced SSI benefit
The Social Security Administration (SSA) treats certain food and shelter expenses as ISM. These are the categories of expenses that an SNT must not be used to pay for for a beneficiary if one can tolerate a potential reduction in benefits:
Special needs trusts may be used to pay for a wide range of other expenses. Items that serve to promote the beneficiary’s education, career advancement, fitness, health, or even recreational fun can be paid for using SNT funds. In essence, just about anything that SSI or Medicare does not already cover may be paid for using SNT funds.
Some of the more common examples of expenses that may be covered using SNT funds without repercussion include:
If you are interested in setting up a special needs trust, or you are concerned about the items an SNT may cover, talk to a special needs trust and estate planning lawyer.
A Medicaid planning and special needs trust attorney at Shalloway & Shalloway can help protect your family, creating an estate and special needs plan suited for your individual needs and circumstances. We will evaluate your situation to determine the best type of will, trust, or other legal tool that may benefit your family the most. Contact the experienced and professional West Palm Beach estate planning attorneys at Shalloway & Shalloway at 561-686-6200.