Can a Special Needs Trust Pay for Food and Shelter?

You can use a special needs trust to buy groceries or pay rent or mortgage for the beneficiary—but it might not always be a great idea.

By , Attorney
Updated by Jeff Burtka, Attorney George Mason University Law School
Updated 4/02/2024

If you are serving as trustee of a special needs trust, you need to know whether you can use the trust funds to pay for housing or food. The short answer is you can, but you may not want to. This article explains why.

In-Kind Support and Maintenance (ISM)

Can a special needs trust pay the rent, mortgage, or groceries? Yes, but you might run into some drawbacks. To understand why, it's important to first understand that when the trustee of a special needs trust pays for the beneficiary's food or shelter, the amount paid is considered income to the beneficiary. Specifically, it's called in-kind income or in-kind support and maintenance (ISM). The Supplemental Security Income (SSI) program treats ISM differently from other types of income.

If the ISM can be assigned a specific value, that amount is deducted from the SSI grant—up to a limit. The amount of the deduction is currently capped at $334.33 in 2024. (This value, which is tied to the federal benefit rate, goes up each year).

EXAMPLE: Leo, who lives in his own home and receives an SSI grant because of his Down Syndrome, loves to eat out. Each month, Leo's restaurant tab averages $120. If the cost of the meals is picked up by a special needs trust or other outside source, Leo's SSI grant will be reduced dollar for dollar by $120. If Leo had fancier tastes and, courtesy of his special needs trust, spent $500 a month eating out, his grant would also be reduced, but only by a maximum of $334.33.

These rules mean that, if necessary, a special needs trust can provide your loved one with food or shelter—and still leave your loved one with the lion's share of the SSI grant as well as continued eligibility for Medicaid benefits.

Paying for Shelter May Be Worth the Reduction in Benefits

The question of ISM comes up most often with shelter, because the SSI grant is so inadequate when it comes to paying rent in the private housing market. If you use the special needs trust to pay for rent or mortgage payments on a house owned by the beneficiary, these payments are considered ISM, so they trigger a reduction of the SSI grant. Still, if a beneficiary's shelter needs can be met only through rental assistance from the special needs trust, a $334.33 reduction in the monthly SSI grant can be well worth it.

EXAMPLE: Sonya, the beneficiary of a special needs trust, receives SSI and Medicaid. When Sonya's group home closes, she is forced to rent housing at private market rates. She finds a suitable apartment for $2,000 per month—considerably more than her potential $943 SSI grant. The trustee of Sonya's special needs trust decides to pay for all of Sonya's rent and utilities, a total of $2,300 a month. Trust payments for rent and utilities are considered ISM, so Sonya's SSI grant will be reduced. The federal portion of the grant in 2024 is $943, and Sonya will lose $334.33 of her SSI check. She will also continue to receive Medicaid. In other words, Sonya's trust pays $2,300 for a nice, safe and clean apartment for Sonya, and her SSI is reduced only by $334.33. She continues to receive $608.67 in SSI.

It's important to know how much SSI a beneficiary is receiving. If Sonya was receiving less than $334.33 in SSI because she was receiving income from another source, the payment of the rent in the example above would eliminate her eligibility for SSI. Thus, it is important to know how much SSI the person with a disability is receiving to make sure that there is not a total loss of SSI and an accompanying loss of Medicaid.

Once the ISM maximum reduction of $334.33 (in 2024) is reached, the trustee may pay for all the beneficiary's food, rent, and utilities without any further reduction in SSI.

Can a Special Needs Trust Own a House?

If a special needs trust owns a house or has enough assets to buy one outright, the beneficiary may be able to live in the house rent-free without affecting his or her SSI grant. (For more about this, read How Special Needs Trust Funds Can Be Used.)

However, if the trust pays other expenses associated with shelter—such as electricity, heat, or water—the amounts are considered ISM, and the grant is reduced dollar-for-dollar up to the $334.33 per month (in 2024) maximum deduction, as described above. If the trust were making mortgage payments on the house, those payments would also be considered ISM and would result in an SSI reduction, up to $334.33 per month.

Computing the Maximum Deduction for ISM

The maximum federal SSI grant increases every year, as the cost of living increases. In 2024, it is $943. The maximum deduction for ISM is one-third of this amount, plus $20: $334.33.

For more information on federal and state SSI benefits, visit the Social Security Administration's website at

For the ISM maximum deductions each year, see the SSA's Values for In-Kind Support and Maintenance.

Food stamps, low-income housing assistance, state-funded cash benefits, and noncash government benefits don't count as income in kind for purposes of computing an SSI grant.

Whether to Use a Special Needs Trust to Pay for Housing or Food

Before deciding whether you should use the funds in a special needs trust to pay for rent, mortgage, or food, you should understand how much money will be deducted from the beneficiary's SSI grant, and whether that deduction is worth it (or, conversely, could cause you to lose SSI and Medicaid benefits). In other words, ask the following:

  • How much of the trust funds would you spend each month on rent, mortgage, or food?
  • How much SSI is the beneficiary receiving each month?
  • How much will be taken from the beneficiary's SSI grant each month as a result of the ISM deduction? (See the discussion above; this amount is capped.)
  • Does the deduction exceed the beneficiary's SSI grant? (If so, you should not proceed, as you could lose not only SSI, but Medicaid as well.)
  • Is the benefit to the beneficiary worth that deduction in the SSI grant?

More About Special Needs Trusts

To learn more about special needs trust, go to Nolo's Special Needs Trusts section.

For a detailed description about properly administering a special needs trust, read Administering the California Special Needs Trust, by Kevin Urbatsch and Michele Fuller.

This article was excerpted from Special Needs Trusts, by Kevin Urbatsch and Michele Fuller-Urbatsch (Nolo), which provides all of the information and forms you need to create a special needs trust without a lawyer.

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