What Expenses Can Be Paid From A Special Needs Trust?

Special Needs Trusts are valuable tools used to assist individuals with special needs to pay for everyday expenses that are not covered by any government benefits programs. But, the funds in the trusts must be used correctly, or else the individual with special needs is in danger of having their benefits reduced or taken away.

What is a Special Needs Trust?

Many individuals with special needs qualify for government benefits such as Medicaid and supplemental security income (SSI), which can help them pay for various costs. While the benefits they receive will help them pay for many of their day-to-day living expenses, the funds are not enough to cover all of their living costs.

When the benefits are not enough to cover an individual’s costs, it is wise for their family to create a Special Needs Trust for them to use. A Special Needs Trust, also referred to as a Supplemental Needs Trust, is a trust used to provide supplemental benefits to individuals with disabilities without disqualifying them from receiving government benefits. For example, if the government benefits do not cover costs such as cell-phone or wifi bill, funds from a Special Needs Trust may be used to assist your loved one in paying these bills.

Common Expenses A Special Needs Trust Covers

These government benefit programs are highly selective, and the government will disqualify a person with special needs for a litany of reasons. For instance, a qualifying individual with special needs is required to have minimal amounts of cash, money in savings accounts, and their home must be below a specific price point.

If the individual has more than the maximum amount of money allowed or they are improperly using money they receive from a Special Needs Trust, they will be stripped of their benefits. The following are a few of the most common expenses that a Special Needs Trust can be used to pay for:

  • Medication not covered by Medicare or Medicaid
  • Medical Equipment not covered by Medicare or Medicaid
  • Personal Assistants
  • Clothing
  • Furniture
  • Home Appliances
  • School or Camp Tuition
  • Cell Phone Plans
  • Internet/Cable Access
  • Entertainment or recreation tickets

The trustee of the Special Needs Trust needs to make consistent distributions to the individual with special needs, and the trustee should periodically speak with an experienced estate planning attorney to ensure the funds are being used appropriately. If you are unsure whether or not a cost can be covered by the funds in a Special Needs Trust, contact JacksonWhite Law to schedule an appointment with an experienced attorney.

What Costs Should Not be Paid for With Funds from A Special Needs Trust?

If an individual with special needs is receiving SSI payments, they should not be using the funds from their Special Needs Trust to pay for the following basic expenses:

  • Food or Groceries
  • Meals at a Restaurant (except for special occasions such as a birthday)
  • Rent or Mortgage Payments
  • Property Taxes
  • Homeowners or association dues
  • Homeowners insurance
  • Utilities such as electricity, gas, and water

What Happens When Funds in A Special Needs Trust are Used Improperly?

Suppose the funds from a Special Needs Trust are used improperly. In that case, the individual with special needs is in jeopardy of having the number of benefits they receive reduced or even taken away. For instance, if the funds from the trust are used to pay for expenses listed above, the individual with special needs may have their SSI benefits reduced by one-third.

If the funds are continually used to pay for expenses that are covered by government benefits programs, the individual with special needs may lose all of their benefits. When individuals continually use their own money to pay for expenses the government is covering, the government assumes that they no longer need financial assistance.

An Experienced Attorney Is Here To Help

It’s important to for your loved one with special needs to receive all of the benefits they are entitled to and to have the necessary funds needed to cover the costs of other expenses and entertainment. Even though your intention is to help them, if you use the funds in your Special Needs Trust improperly, your loved one risks losing their benefits.

To avoid putting your loved one at risk of losing their benefits or having them reduced, it’s wise to work with an experienced attorney who can help you determine which expenses can be paid for with the funds in a Special Needs Trust. If you have any questions regarding starting or maintaining a Special Needs Trust, contact the JacksonWhite Estate Planning team today.


Call Arizona Estate Attorney Dave Weed at (480)467-4325 to discuss your case today.

Contact The JacksonWhite Estate Team

Call (480) 467-4325 or fill out the form below to schedule a consultation and discuss your best legal options.

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