When someone has a disability, they cannot receive direct financial support from others and remain eligible for certain federal benefits. If you want to ensure they have funds to improve their quality of life, you can form a special needs trust. This is a legal tool that allows a third party to manage assets and use them for the support of your disabled child or loved one.
Benefit programs are intended to cover the necessities of life for disabled individuals, including housing, food, medical services, and clothing. A special needs trust is intended to supplement these benefits and provide extra support for luxuries or comforts they otherwise would not be able to afford with their benefits.
But what exactly can a special needs trust cover? It is important that you and the trustee of the special needs trust understand what you can use the trust assets for.
Looking Beyond the Basic Necessities
Special needs trusts often cover things that a parent would happily provide for their child – if they could do so without jeopardizing benefit eligibility. The following are some of the many things that a special needs trust might provide:
- Costs of educational programs
- Recreational activities
- Therapy and counseling services
- Dental or medical services not otherwise covered
- Specialty equipment, including electric wheelchairs
- Adaptations to vans or homes to accommodate a disability
- Rehabilitation services
- Entertainment, including sports, movies, camps, or social events
- Travel and vacation, including the costs of a travel companion
- Smartphones, smartwatches, laptops, iPads, and other electronics
- Insurance premiums
- Payment for a daily companion or helper
- Costs of guardianship or other legal issues
- Vehicles, rideshare credits, or public transportation costs
- Legal or guardianship expenses
- Housing expenses beyond the bare minimum
The beneficiary of a special needs trust might be able to purchase a home, start a business, or pursue other hobbies that they might not be able to afford on benefits alone.
What a Special Needs Trust Should NOT Cover
Just as importantly, you should know how special needs trust assets should not be used. First, a trustee should never simply give the beneficiary cash payments from the trust or cover their basic shelter and food expenses. Doing so can easily disqualify them from public assistance.
Once you eliminate cash distributions, cash equivalents, and basic needs, you can use a special needs trust to cover almost anything else that will supplement the lifestyle of your child or loved one. If you ever have questions about whether an expenditure is appropriate, you should not wait to discuss the matter with your estate planning attorney.
An Estate Planning Lawyer Can Help With a Special Needs Trust
Are you worried about how you will provide financial support to your disabled child or loved one as they become adults? You should discuss the possibility of a special needs trust with an experienced estate planning attorney. The right legal professional can help you form the trust properly and provide guidance to ensure you are following the law.