What Your Child’s Special Needs Trust Should NEVER Pay For: Guidance from a Bay Area Special Needs Lawyer

Special Needs Trusts (SNTs) are designed to provide supplemental support to individuals with disabilities without jeopardizing their eligibility for government assistance, such as Medi-Cal or Supplemental Security Income (SSI). However, there are certain expenses that an SNT should not cover. Understanding these can prevent unintentional complications and preserve the trust’s integrity. Let’s dive deeper with insights from a leading Bay Area special needs lawyer.

Potential Pitfalls: Expenses to Avoid

While an SNT can cover many life-enhancing expenditures, here are some it should (almost) NEVER pay for:

1. Cash Distributions Directly to the Beneficiary: Direct cash distributions can be counted as income, potentially affecting SSI and Medi-Cal eligibility. Always ensure disbursements are for specific services or products instead.
2. Basic Food and Shelter: Direct payments for food or shelter-related expenses, including mortgage, rent, utilities, and groceries, can reduce the SSI benefits due to the In-Kind Support and Maintenance (ISM) rule.
3. Assets That Might Count as Resources: Avoid buying assets that could be counted towards resource limits for government benefits. For instance, multiple cars or property not serving as the primary residence can pose problems.
4. Payments to Relatives for Basic Care: Compensating a family member for basic caregiving services can be perceived as a gift from the beneficiary, affecting benefits. Formal caregiver agreements, crafted with a Bay Area special needs lawyer, can provide a structured solution.

Why It Matters

• Maintain Benefits Eligibility: Missteps can jeopardize the beneficiary’s government assistance, often their primary source of support.
• Preserve the Trust’s Intent: The trust’s primary objective is to enhance the beneficiary’s quality of life without displacing primary needs covered by government benefits.
• Avoid Legal Complications: Unintended violations can lead to legal issues, potential penalties, or a need for corrective action. 

Work Closely with a Trusted Bay Area Special Needs Lawyer

The nuances of SNTs require an understanding of both federal and state laws. By working closely with an attorney you’ll:

• Receive guidance on allowable disbursements.
• Ensure compliance with all legal stipulations
• Regularly review and adapt the trust in light of changing needs and regulations.

Getting Help

While a Special Needs Trust is a valuable tool for supporting a loved one with disabilities, it’s vital to be aware of the disbursements that could jeopardize their well-being and benefits. Collaborate with a Bay Area special needs lawyer to navigate the complexities and safeguard your child’s future. If you have questions or require expertise in crafting or managing an SNT, contact us by calling 408-889-1290.