| Ask NOT what you can do, ask what you CAN NOT and you may be surprised…read on:
READER QUESTION:
I am thinking about setting up a third-party special needs trust (SNT) for my son. What can the trustee NOT spend trust money on?
MY RESPONSE:
The simple answer is that there are NO LIMITATIONS (unless the language of the trust is more restrictive) on what an SNT trustee can spend for the benefit of your son. The typical language of these trusts is that the trustee has full discretion to use the money in the trust to enhance and enrich the life of the beneficiary…AS LONG AS THE TRUSTEE DOES NOT USE THE MONEY IN A WAY THAT WOULD SCREW UP THE BENEFICIARY’S GOVERNMENT BENEFITS…but the trust usually goes on to say UNLESS SCREWING UP THE GOVERNMENT BENEFITS is worth it!
We all know that giving money from the trust directly to your son causes him to reduce or eliminate his government benefits, so never do that. However, paying for things from the trust for his benefit may or may not be a problem. For SSI purposes, paying for housing expenses (no longer food and clothing) could reduce his SSI up to about one-third. For Medicaid purposes, there are no such restrictions, except that the trustee should not pay any medical bills that Medicaid would otherwise pick up.
I am oversimplifying this answer, and a full discussion should be had because there are many nuances, but I wanted to convey to you all that setting up a third-party special needs trust for your loved one is a good thing, and they are very flexible to meet their needs.
Just ASK….you may be surprised at what the trust CAN pay for. |
