The Listen to Lawrence Letter: What exactly can an SNT pay for?

My daughter has a First Party Special Needs Trust. The electrical panel in her house is severely damaged and needs to be replaced. Can her trust pay for the repair? We know the trust cannot pay her electric bill.

MY RESPONSE:

Yes. There is an important difference between paying the electric bill and repairing the electrical system in the house.

An electric bill is an ordinary household expense and, if paid by the trust, can affect SSI benefits. Replacing a damaged electrical panel is different. It is a repair to the home, and the Special Needs Trust can generally pay for it without affecting SSI.

I would have the Trustee approve the repair and pay the licensed contractor directly from the trust.

One caution: this answer assumes your daughter owns the home. If someone else owns it, I would want to look more closely before using her trust money to improve someone else’s property.

This is a good example of why we shouldn’t simply say, “The Special Needs Trust can’t pay housing expenses.” Sometimes it can. The details matter.

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