Spending special needs trust funds

By June 10, 2011Special Needs Trusts

In the interest of reviewing one of the most important rules that trustees of special needs trusts must adhere to, let’s take a look at the types of expenditures can be made with special needs trust funds.  Most fundamentally, trustees can never give trust beneficiaries special needs trust funds outright.  Rather, the funds can be used to supplement the beneficiary’s care, but cannot be used like a checking account to provide the beneficiary with open access to funds.

New trustees should work with a special needs trust attorney who can explain that special needs trust funds can only be used for the following types of expenses:

  • Clothing for the beneficiary.
  • Prepaid burial plans
  • Personal care for the beneficiary.
  • Appropriate entertainment expenses.
  • Medical services, including supplemental caregiver services.
  • Trust management expenses.
  • School tuition and books for the beneficiary.

Trustees who use special needs trust funds for expenses beyond those listed above can jeopardize the beneficiary’s eligibility for public benefits.  A general principle to keep in mind is that while special needs trusts should certainly provide beneficiaries with supplemental assistance, special needs trusts are not entirely liquid, in that trustees are restricted in how funds can be used.  A special needs trust attorney is always a great asset for trustees trying to avoid jeopardizing the beneficiary’s public benefits.