Beware Trustees of Special Needs Trusts...

If someone with special needs is a beneficiary of a special needs trust and is also receiving SSI (Supplemental Security Income) benefits then the Trustee of the trust must be very careful to not make any distributions that would jeopardize SSI eligibility.

One of the no-no's for the trustee is paying for "food" or "shelter".  If a special needs trust picks up the tab at the restaurant or covers the grocery bill then it may reduce or eliminate the SSI benefits.  Although food is allowed under certain circumstances, such as food provided during a "medical confinement".

There could also be SSI eligibility problems if the trustee uses trust funds to pay for shelter costs such as rent, heating fuel, gas, electricity, water, sewerage and garbage collection services.  Again, the "medical confinement" exception applies.

But don't confuse "shelter costs" with "home ownership".  It's OK for a special needs trust to owna house in which the SSI beneficiary lives.

By the way, the words "food" and "shelter" are usually accompanied by the word, "clothing".  But not in the world of SSI eligibility, as of 2005.  In other words, gifts of clothing to SSI beneficiaries are no longer a problem because it's not counted as income or in-kind support and maintenance.

Comments

[Randall Ryder]

Great post - very important information for people setting trusts for people with special needs.

[Kristina Vickstrom, Esq.]

Good info. Unfortunately many trustees don't know how to properly do their jobs. I wish more attorneys would include trustee instructions as part of the supplemental needs trust/special needs trust process, rather than ending representation at the drafting.

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I wish more attorneys would include trustee instructions as part of the supplemental needs trust/special needs trust process, rather than ending representation at the drafting.

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[Matthew Karr]

Thanks for the info--it is indeed a very fine line that trustees must balance in helping spacial needs clients. Glad to see you are helping to keep them educated in CT.

[Attorney Bucks County]

Thanks for posting this. This information is definitely going to help a lot of people. I've bookmarked the blog to read more later on.

[Asian Tv]

While some parents choose children or other relatives as trustee, in our view, this is a mistake. We believe that an independent corporate trustee with experience in this area should be appointed. However, family members are often named as “special trustees” to act as a liaison between the disabled individual and the trustee.

[George Garcia]

I would agree that if someone with special needs is a beneficiary of a special needs trust and is also receiving SSI benefits then the Trustee of the trust must be very careful to not make any distributions that would jeopardize SSI eligibility.

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