What Can Be Paid For With Trust Funds?

One of the most important and common questions that Trustees ask is regarding the specific sorts of items that funds from a Special Needs Trust and Supplemental Needs Trust may purchase for the Beneficiary. Generally speaking, there are three important questions to keep in mind when making this decision: 1) Is the good or service provided by government benefits? 2) Is the distribution allowed by the Trust Agreement? 3) Is the distribution for the sole benefit of the Beneficiary?

Let’s say, for example, that the Beneficiary’s transport vehicle needs a repair to its accessible ramp. This repair cost can paid with trust funds if it is not covered through government assistance, if  this type of expense is allowed in the Trust Agreement, and if the distribution is for the sole benefit of the Beneficiary. In most cases, an accessible ramp repair fits the bill. Some other examples of common trust purchases are a new TV for the Beneficiary’s room, a hotel room rental on vacation, a class at a local community college, or non-government funded medical expenses such as massage therapy.

Things may get a little bit more confusing when it comes to paying for food and shelter. Government assistance is intended to cover housing and food, so in order for the Beneficiary to continue receiving all of his or her available funding, it is important to make sure that trust funds do not pay for groceries, regular restaurant meals, rent, utilities, or home insurance. Also, the Beneficiary should not receive cash directly from the trust. Legally speaking, these types of expenditures are an increase to the Beneficiary’s personal income, which triggers a reduction in government funding. However, one caveat to keep in mind is that when trust funds are used for food and shelter costs, there is a reduction of only $1 dollar to SSI benefits for every $3 dollars spent. For some beneficiaries, this tradeoff may actually be the best course of action. That is why it is helpful to consult with an attorney who specializes in Special and Supplemental Needs Trusts. Not only will the attorney explain the full range of goods and services that the trust may provide, he or she will also be able to hash out the best spending options for your given situation.

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