Spending Arizona special needs trust funds

By May 5, 2011Uncategorized

While we do cover this topic pretty frequently, understanding the rules that regulate what you can and cannot spend Arizona special needs trust funds on is critical to your decision of whether to establish such a trust.  And furthermore, if you already have a special needs trust, understanding what you can and cannot spend Arizona special needs trust funds on can keep you from defeating the ultimate objective for which you established the trust to begin with.

Appropriate ways to spend Arizona special needs trust funds

As you probably know, special needs trusts are used to help people who otherwise have too many resources qualify for public benefit programs, such as ALTCS.  Of course, if it were as simple as placing all of your money in a trust, then using that trust for whatever purposes you wanted, establishing a special needs trust would hardly seem ethical.  In reality, however, there are many limitations on how you may spend Arizona special needs trust funds.  For example, Arizona special needs trust funds can be used on the following types of items:

  • Uncovered health care expenses
  • Furniture and other personal effects
  • Vacations and entertainment
  • Hobbies
  • Funeral or burial expenses
  • Emergency legal expenses

Inappropriate ways to spend Arizona special needs trust funds

Now that you have an idea of how you can spend Arizona special needs trust funds, we should talk about restrictions on spending from Arizona special needs trust funds.  The trust will not be effective unless its very language prohibits using the Arizona special needs trust funds on the beneficiary’s basic needs.  Specifically, this means that Arizona special needs trust funds cannot be used to pay for items such as housing, Medicaid-covered medical treatments, clothing items, or food.  If Arizona special needs trust funds are used on a prohibited expense, the cost of the expenditure is treated as income, which could very well cause public benefit eligibility problems for the beneficiary.

If you decide to establish a special needs trust, you will have an Arizona special needs trust attorney help you draft the document.  Do not leave his or her office until you are very clear on how the Arizona special needs trust funds can be used.  Unless you adhere to the above-mentioned rules, you could easily defeat the very purpose for which you established trust to begin with.  JacksonWhite has a special needs trust practice, and we would be happy to answer any questions you have about how you may spend Arizona special needs trust funds.