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What Can a Special Needs Trust Be Used and Not Used to Pay For

Businessman holding a card with SPECIAL NEEDS trust message

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.

Items Special Needs Trusts Cannot Cover Without a Reduction in the SSI Payment

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:

  • Food
  • Water
  • Sewer
  • Garbage removal
  • Heating
  • Electricity
  • Property taxes
  • Rent
  • Mortgage
  • Gas

Items Special Needs Trusts Can Cover

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:

  • Tuition for training and education
  • Therapy or rehabilitation services
  • Insurance
  • Travel, including the costs for a companion
  • Recreational activities such as concerts or sporting events
  • A car
  • Vacations
  • Help starting a business
  • Special medical equipment not covered by Medicare, such as wheelchairs, in-home chair lifts, specially-equipped vehicles, and others
  • Dues for a health club and other memberships
  • Decorations
  • Alarm systems
  • Purchase of a home
  • House cleaning
  • Groceries other than food (household supplies, laundry supplies, toilet paper, etc.)
  • Sporting goods and athletic equipment
  • Telephone and internet service
  • Other utilities, such as television and streaming services

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.

Plan For Your Future and Protect Your Loved Ones With Help from a Special Needs Trust and Medicaid 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.

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