The purpose of a third party special needs trust is to provide persons with disabilities the means to augment their quality of life while enabling them to remain eligible for needs-based public benefits. While a special needs trust is a valuable tool for helping individuals with special needs pay for daily expenses that are not subsidized by any government benefits programs, the funds in a special needs trust must be used properly or benefits may be reduced or eliminated entirely.
Federal programs like Supplemental Security Income (SSI) and Medicaid help provide some essential needs such as medical care, food, clothing, and shelter. However, in most instances, they are insufficient to meet an individual’s needs in their entirety. Therefore, a special needs trust is created to supplement, rather than replace, this support.
Special needs trusts pay for the expenses specified in the trust document and may include items for which public assistance benefits don’t pay. These trusts typically pay for expenses such as education, recreation, and medical treatment not covered by government benefits.
The following are some examples of expenses that a special needs trust may cover:
- Medication and medical equipment not covered by Medicare or Medicaid
- Clothing
- Furniture
- Home Appliances
- School or Camp Tuition
- Cell Phone
- Internet/Cable
- Entertainment or recreation (movies, concerts, social events, videos, sports equipment)
- Personal Assistants
- Payments for a companion
- Legal or guardianship expenses
- Insurance
- Electronic equipment and appliances, computers
- Burial expenses
- A home
- Assistance with starting a business
If an individual with special needs is receiving SSI payments, the trustee should be aware that distributions from a special needs trust for the following expenses may cause a reduction of the SSI benefit:
- Food including groceries and meals at a restaurant
- Rent or Mortgage Payments
- Property Taxes
- Homeowners’ association dues
- Homeowners insurance
- Utilities such as electricity, gas, and water
If funds from the trust are used to pay for any of the expenses mentioned above, the individual with special needs may have their SSI benefits reduced by one-third. Because these rules are complex, the settlor and trustee of a special needs trust should consult with an experienced attorney to ensure that any distributions from the trust are proper.
Rubin Law is a unique organization with a solitary purpose. We are a law firm solely dedicated to improving the lives of children and adults who suffer from intellectual disabilities, developmental disabilities, and mental illnesses. Rubin Law is the only law firm in Illinois that limits its practice to providing legal services and future planning for adults and children with special needs. We offer patience, compassion, and a unique understanding to those with disabilities and those who care for them. For more information, please email us at email@rubinlaw.com or call 866-TO-RUBIN.
