A Supplemental Needs Trust (frequently called a Special Needs Trust or simply an “SNT”) is an important estate planning tool. The purpose of a Supplemental Needs Trust is to safeguard certain assets (generally a settlement or an inheritance) without disqualifying the individual from eligibility for public benefits. Understanding the special needs trusts permissible distributions is critical to the effective administration of the Trust.
One of the duties of the Trustee of a Supplemental Needs Trust is to understand what public benefits programs might be available to the beneficiary and how the receipt of income, or a provision of food or shelter, might affect eligibility. Once the Supplemental Needs Trust is created by a qualified estate planning attorney, the Trustee has the responsibility to use the Trust funds for the benefit of the individual without violating the many complicated and often changing rules of Social Security and Medicaid. Conceptually, the idea is that permissible distributions from the Supplemental Needs Trust must be “supplemental” to those need-based benefits being provided by the government.
The following is a basic list of permissible distributions:
- Accounting services
- Acupuncture / Acupressure
- Appliances (TV, VCR, stereo, Microwave, stove, refrigerator, washer/dryer)
- Bottled Water or water service
- Bus pass/public transportation costs
- Camera, film recorder and tapes, development of film
- Clubs and club dues (record clubs, book clubs, health clubs, service clubs, zoo, Advocacy Groups, museums)
- Computer hardware, software, programs
- Internet services
- Courses or classes (academic or recreational) including supplies
- Curtains, blinds, drapes and the lik
- Dental work not covered by Medicaid, including anesthesia
- Down payment on home or security deposit on apartment.
- Dry cleaning and/or laundry services
- Elective surgery
- Fitness equipment
- Funeral expenses
- Furniture, home furnishings
- Gasoline and/or Maintenance for automobile
- Haircuts / Salon services
- Holiday Decorations, parities, dinner dances, holiday cards
- Home alarm and/or monitoring/response system
- Home improvements, repairs and maintenance (not covered by Medicaid), including tools to perform home improvements, repairs and maintenance by homeowner.
- Home Purchase (to the extent not covered by benefits)
- House cleaning / maid service
- Insurance (automobile, home and/or possessions)
- Legal Fees/Advocacy
- Linens and towel
- Musical Instruments (including lessons and music)
- Non-food grocery items (laundry soap, bleach, fabric softener, deodorant, dish soap, hand and body soap, personal hygiene products, paper towels, napkins, Kleenex, toilet paper, any household cleaning products)
- Over the counter medications (including vitamins and herbs, etc.)
- Personal Assistance Services not covered by Medicaid
- Pet and pet’s supplies, veterinary services
- Physician specialists if not covered by Medicaid
- Private counseling if not covered by Medicaid
- Repair services (appliance, automobile, bicycle, household, fitness equipment)
- Snow removal/Landscaping/Lawn Service
- Sporting goods/equipment/uniforms/team picture
- Stationary, stamps, cards, etc.
- Storage Units
- Taxi cab
- Telephone service and equipment, including cell phone, pager, etc.
- Therapy (Physical, Occupational, Speech) not covered by Medicaid.
- Tickets to concerts or sporting events
- Transportation (automobile, motorcycle, bicycle, moped, gas, bus passes)
- Vacation (for the beneficiary only)
The following are examples of Trust distributions which will cause a direct reduction of SSI benefits:
- Basic shelter related expenses
- Basic items of clothing
- Cash for any purposes
The following are examples of Non-Permissible Distributions:
- Paying for a service already paid for by another source
- Distribution not in the best interest of the beneficiary (made primarily for the benefit of another person)
As with other trusts, the trustee of a special needs trust is prohibited from self-dealing. That means no investment of trust assets in the trustee’s business or assets, no commingling of trust and personal assets, no borrowing from the trust, no purchase of goods or services (by the trust) from the trustee, and no sale of trust assets to the trustee.
The Probate Pro can provide assistance in the creation and administration of Supplemental Needs Trusts. The Probate Pro can assist in determining what distributions are permissible distributions from a Supplemental Needs Trusts.