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What Can The Money In A Special Needs Trust Be Used For?

special needs trust

As an estate planning attorney, I have been instrumental in setting up a wide variety of trusts for my clients. Having practiced law since 1969, I’m experienced in setting up trusts, including Special Needs Trusts for children and adults with disabilities. As part of setting up a trust, I counsel and educate the trustees regarding what the funds can be used for. I also caution and counsel them regarding what the funds cannot be used for, in order to avoid placing the trust in jeopardy.

Special Needs Trust: What Is It?

A Supplemental Needs Trust, also known as Special Treatment Trusts or Special Purpose Trusts, are an essential part of an Estate Plan for a family who has a disabled child or a disabled adult under the age of 65.

The purpose of the Special Needs Trust is to enable the disabled person to continue to receive their public benefits, such as Medicaid, supplemental security income, and food stamps.

What Are Its Limitations?

As indicated, there are strict limitations placed upon what can be paid out of the Special Needs Trust and what cannot. If those limitations aren’t adhered to, the disabled person’s public benefits could become in jeopardy of being canceled. The trust must be created by a parent, grandparent, guardian, or the court.

Receipt of any of the following benefits by a disabled person with special needs would be considered countable resources possibly jeopardizing the Trust, depending upon the amount:

  1. An inheritance received by a disabled child or an adult living in a skilled nursing facility from a deceased person’s Will.
  2. A settlement received by a disabled child or an adult living in a skilled nursing facility as a result of a personal injury settlement.
  3. Settlements received from a divorce in the form of either an equitable distribution, alimony, or ongoing child support payments.

The law used to prohibit a disabled person from setting up their own Special Needs Trust. However, with the enactment of the Special Needs Trust Fairness Act on December 13, 2016, that law changed. Disabled individuals with the mental capacity to do so and who are under the age of 65 are now able to establish and control their own Trusts.

What Can The Money In A Special Needs Trust Be Legally Used For?

There are strict limits placed upon what the monies in the Special Needs Trust can be legally used to pay for. The following is a list of some of the allowable expenditures which won’t have a negative impact upon the Trust:

  1. Medical or dental expenses not otherwise covered under insurance
  2. Special equipment such as a wheelchair or a specially-modified van
  3. Physical therapy and/or rehabilitation services ordered by a doctor
  4. Training and education expenses
  5. Travel, including the costs of taking a companion along on the trip
  6. Recreation and entertainment, This includes, but is not limited to, summer camp, movies or social events, videos, sports equipment, and the like
  7. Electronic equipment, appliances, and computers
  8. Legal expenses and/or guardianship expenditures
  9. Insurance payments
  10. Burial expenses
  11. Purchase of a car
  12. Purchase of a home

The above list is for illustrative purposes only. To ensure that expenditures are not made out of a Special Needs Trust for items that are not allowable, it is a good idea to consult with an experienced estate planning attorney who is familiar with this type of Trust.

Special Needs Trust Help In Coral Springs

For this or any other legal questions regarding wills & trusts, contact the law firm of Gary I. Handin today at (954) 796-9600. Schedule an appointment to discuss your special needs trust, what expenditures are allowed, and which ones could place your trust in jeopardy.

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Law Offices of
Gary I. Handin, P.A.

Providing professional legal services for the city of Coral Springs. Contact us today for a free consultation – 954-796-9600.

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