The person serving as trustee of the special needs trust can usually pay for anything for the person with special needs, as long as the purchase is not against public policy or illegal and does not violate the terms of the trust. Importantly, however, certain types of disbursements – most notably payments for food and shelter-- may reduce the amount of SSI. Read more about Payments for Food and Shelter.
It’s common for the trustee to pay for a broad variety of services provided to the beneficiary—for example, travel, education, caregiving, or medical services not provided by Medicaid. The person serving as trustee can buy the beneficiary “non countable” assets without worrying about how much they’re worth.
Non countable resources are types of property not considered to be a resource by the SSI and Medicaid programs for purposes of determining the owner's program eligibility. A beneficiary can usually own a substantial amount of these types of property without losing eligibility for SSI and Medicaid.
So a trustee may use trust funds to buy non countable items such as:
Anyone who owns more than $2,000 worth of countable resources is not eligible for SSI. So a trustee should not give the beneficiary countable assets worth more than $2,000. If a trustee gives the beneficiary countable assets worth less than $2,000, the beneficiary’s SSI grant will be reduced, dollar for-dollar, in the month the income is received. (A small exception to this rule is that the first $20 of a gift received in a given month is not counted.)
Countable resources include:
How does the SSI program know what and how much a recipient owns? Generally, the bureaucracy relies on the recipient’s own required reports and on information from the IRS, state motor vehicles department, and banks. If for some reason an investigation is begun, the recipient’s financial affairs will be examined more closely.
Read more about countable and non countable resources at http://www.socialsecurity.gov/ssi/text-resources-ussi.htm.
Learn more about The Trustee’s Job.
For a detailed description about properly administering a special needs trust, read Administering the California Special Needs Trust, by Kevin Urbatsch.
Nolo’s Lawyer Directory can find an attorney to help you with your special needs trust.
Excerpted from Special Needs Trusts, by Kevin Urbatsch and Michele Fuller (Nolo).