Permissible and Impermissible Distributions from Special Needs Trusts
The following are some examples of expenses and distributions that can and cannot be made from a Special Needs Trust. This list is not exhaustive, but is meant to provide some guidelines as to the proper administration of a Special Needs Trust.
1. Purchase of home or condo, as long as rent is paid by the special needs person at its fair rental value from income he or she receives from SSI or other sources (other than payments from the Trust);
2. Home improvements and repairs by a third party;
3. School tuition, books and supplies;
4. Vacation travel;
5. Entertainment, such as books and magazines, movies, plays, electronic equipment, games, etc.;
6. Insurance premiums;
7. Transportation (such as purchase of a handicap van, car or train tickets);
8. Telephone and cable television expenses;
9. Dental care and other medical costs not covered by any benefit program;
10. Medical equipment and medical expenses for care not covered by any benefit program.
Distributions Which May Reduce or Eliminate Government Benefits
1. Shelter expenses, such as mortgage payments, real property taxes, utilities, etc., if rent is not paid by occupants. If the Trust owns a home that the special needs person lives in and he or she does not pay rent, SSI and other benefits may be reduced and Medicaid may have the right to take the home after the special needs person’s death;
4. Cash paid directly to the special needs person.
You should contact legal counsel if you have any questions about distributions from a Special Needs Trust.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.