A special needs trust can allow a disabled loved one to receive supplemental care while maintaining their Medicaid and/or SSI benefits. Drafting and administering the trust must happen with a clear understanding of how the SNT works in conjunction with government benefits. If the trustee, or their special needs trust attorney, does not follow the process correctly, the beneficiary could lose their government benefits.
How a Special Needs Trust Works
An SNT allows someone to leave funds, and tangible items, with the trust. These assets can then go towards paying for things the beneficiary may want or need.
A trustee will have direct control of the trust. This prevents the beneficiary from spending the funds wildly, or jeopardizing their standing with their established government benefits.
Understanding the Caveats of a Special Needs Trust
Medicaid and SSI have strict income requirements. A trust can bypass those requirements since the beneficiary does not have direct control. The trustee has the onus of making sure the funds and other assets of the trust do not violate those government benefits.
The named trustee can be anybody; it can become a problem if they’re not sure about how to administer the trust. A trustee can do the following without clashing against government benefits.
- Bequeath or purchase a primary home or vehicle for the beneficiary
- Purchase household items for a beneficiary, such as furniture and other things that fit in a home
- Pay for things that directly help with the beneficiary’s occupation or schooling
- Pay for caregiving that’s not paid for by government benefits
- Pay for services and utilities such as cell phones and internet
These all fall under non-countable resources, and there are more of them besides. Countable resources are the ones that can count against the beneficiary’s benefits. These would include things like cash, bank accounts, stocks, and the like.
Trustees Must Exercise Great Care When Administering an SNT
Because there are so many caveats involved, it’s important trustees of SNTs learn precisely what they can and cannot do. Misusing the trust can cause a loved one to lose much-needed benefits for years, or worse, make them ineligible.
It’s not necessary to use a special needs trust attorney to help draft and administer an SNT. However, it can go a long way towards making sure everybody involved knows how to navigate the process without causing any additional hardship to the person they are trying to help.