Special Needs Trusts (SNTs) are established to protect money and property for individuals with special needs while allowing them to receive public benefits. A Trustee is named to make financial decisions regarding the Special Needs Trust (such as purchases) but must stay within strict guidelines to ensure benefits are not jeopardized. The following is a list of do’s and don’ts that Trustees can follow to help guide decisions about Special Needs Trust funds, though any final decision should be run by an attorney experienced with SNT issues.
The simplest answer for what Special Needs Trust funds can be spent on is non-countable resources. These are resources that federal and state disability benefits programs like Social Security and Medi-Cal do not count when determining eligibility for those programs. Such non-countable assets include:
- One primary residence of any value in California.
- Assets used for business or education that lead to an occupation, such as vocational school, which fall under SSI’s Plan for Achieving Self-Support (PASS).
- Irrevocable funeral expenses of any value.
- Term Life Policies of any amount and whole life policies with a cash surrender value of less than $1,500.
- One vehicle of any value.
- Furnishings, personal property, and property needed as an employee of a business or needed to run a business.
If you plan on purchasing any of these items using Special Needs Trust funds, it’s important that you first consult with a lawyer experienced in special needs matters to ensure that you do not affect the individual’s benefit eligibility.
On the other hand, countable assets worth more than $2,000 are not permitted according to SSI and Medi-Cal guidelines. This means that Special Needs Trust funds cannot be used for investment purposes or to buy property beyond a person’s primary needs. These include:
- Investment accounts
- Stocks and bonds
- Any real property other than a primary residence
- Multiple automobiles
- Retirement assets, including 401(k)s and IRAs
If you would like to learn more about the do’s and don’ts of Special Needs Trust funds, or if you need help planning for a loved one with special needs, please set up an appointment at our Encino special needs law office by calling (818) 905-6088.