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Dutchess OfficeSpecial Needs Planning and Supplemental Needs Trusts: What Should a Trust Not Pay For?
A supplemental needs trust is an important tool that can be used to make sure a child with special needs has access to the services and care he or she requires. Establishing a supplemental needs trust as a part of an overall financial plan is one step in providing a solid base of lifetime support. Once a child turns 18, his or her income will be used to determine eligibility for public benefits such as Medicaid and Supplemental Security Income (SSI). Earning too much will lead to the loss of these important benefits. However, funds paid into a supplemental needs trust will not be counted as income and, therefore, will allow an individual with special needs to retain public benefits.
There are rules governing what the funds paid from a supplemental needs trust may be used for. Supplemental needs trusts are meant to “supplement” necessary income, to pay for “luxuries” that Medicaid or SSI does not cover. Therefore, if funds from the trust are used regularly to purchase necessities, such as groceries or housing, those funds may count as income. Certain items should not be paid for from a supplemental needs trust if the beneficiary is receiving SSI. These include:
• Cash given directly to the beneficiary
• Food, including groceries and eating out if it is done on a regular basis
• Housing expenses, such as rent, mortgage, or property taxes
• Homeowners or renters insurance, if it is required by the mortgage or rental community
• Utilities and utility connection charges
Some of these payments may only cause a partial reduction in SSI benefits. Individuals wishing to use funds from a supplemental needs trust for any “necessary” expenditures should consult a special needs planning attorney about their specific situations. Seeking advice will help a trustee determine whether the benefits of making payments from the trust are worth the loss of SSI income.
To learn more, visit http://www.littmankrooks.com.
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2 Responses to “Special Needs Planning and Supplemental Needs Trusts: What Should a Trust Not Pay For?”You must be logged in to post a comment.
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