• Charlotte: +704.369.9977
  • Fort Mill: +803.594.4453
Consultation Request
Share

NC and SC Estate Planning and Elder Law Firm

Monday, October 25, 2021

What Can Special Needs Trust Proceeds Be Used For?

A special needs trust can be an extremely valuable estate planning tool. Designed to provide a person with special needs funds to help ensure a certain quality of life is enjoyed without jeopardizing eligibility for need based government benefits, a special needs trust can cover a wide range of expenses on behalf of the beneficiary with special needs. What exactly can the proceeds of a special needs trust be used for? We will take a look at that here.

What Can Special Needs Trust Proceeds Be Used For?

Need-based government benefits such as Medicaid and Supplemental Security Income (SSI) provide coverage for essentials like certain medical expenses as well as food, clothing, and shelter. It is critical to understand this as proceeds from a special needs trust cannot go towards paying for things that are covered by government benefits without risking loss of such benefits. That is why special needs trusts are often referred to as “supplemental needs trusts.” Trust distributions are for providing supplemental coverage for expenses that are not covered by government benefits.

If the proceeds from a special needs trust cannot cover basic expenses that would be or are covered by government benefits like Medicaid or SSI, then what can they cover? Well, special needs trusts can go towards paying for many things that provide comfort and care to the beneficiary. Expenses that may be covered by special needs trust proceeds without risking penalties associated with government benefits include:

  • Education expenses
  • Job training expenses
  • Counseling services
  • Medical expenses not covered elsewhere
  • Dental expenses not covered elsewhere
  • Specialty medical equipment such as wheelchairs
  • Mobility accommodations like ramps and specially equipped vans
  • Rehabilitation services
  • Travel expenses, include companionship costs
  • Recreational activities
  • Entertainment expenses
  • Electronic equipment
  • Appliances
  • Guardianship expenses
  • Insurance costs
  • Cost of transportation (whether it be a car, bus pass, rideshare membership, or some other mode of transportation)

Trustees of special needs trust need to be very careful about the expenses the trust will cover and how such expenses will be covered. Cash distributions made directly to the trust beneficiary, for example, should be avoided. Such distributions could count against the beneficiary for government benefit calculation purposes. Gift cards distributed to the beneficiary can also jeopardize government benefits, although this risk can be minimized by ensuring that the gift card value cannot be transferred. Even having the trust pay credit card bills for the beneficiary should be handled with care. If the credit card was used to pay for essentials, such as food, that are covered by government benefits, then paying off the credit card could result in a penalty to the special needs beneficiary.

Estate Planning Attorney

This is just a basic overview of the complexities involved in properly administering a special needs trust. When in doubt, one of the best ways you can protect the best interests of your loved one with special needs is to consult with a knowledgeable attorney. At Monk Law, we are here to help. Contact Monk Law today.


Archived Posts

2021
November
October
September
August
July
June
May
April
March
February
January
2020
December
November
October
September
August
July
June
May
April
March
February
January
2019
2018
December
November
October
September
August
July
June
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
December
November
October
September
August
July
June
May
April
March
January
2015
December
November
October
September
August
July
June
May
April
March
February
January
2014
December
November
October
September
August
July
June
May
April
March
February
January
2013


Monk Law Firm, PLLC assists clients throughout Charlotte, Rock Hill, Fort Mill and the surrounding areas.



© 2021 Monk Law Firm, PLLC | Disclaimer
1701 First Baxter Crossing, Suite 101, Fort Mill, SC 29708
| Phone: 803-594-4453
6000 Fairview Road, Suite 1200, Charlotte, NC 28210
| Phone: 704-369-9977

Estate Planning | Elder Law / Medicaid Planning | Guardianships | Probate / Estate Administration | Special Needs Planning | Veterans Benefits | Business Law | Business Succession Planning | Florida Veteran's Aid and Attendance | Covid-19 Update

Law Firm Website Design by
Zola Creative