You have an adult child with special needs, and you’ve been told that the best thing you can do for their future is to create a special needs trust. That way, your child can benefit from the inheritance you want to give them.
Special needs trusts are designed in a way that doesn’t interfere with their beneficiaries’ potential rights to Supplemental Security Income (SSI), Medicaid and other needs-based benefits. Problems can still arise, however, when the funds in a special needs trust are used incorrectly.
What’s the right way to spend money in a special needs trust?
The public benefits your child receives are only intended to cover the basic minimums, but the money from a special needs trust can be used to enhance their quality of life.
In general, here are the sort of things that money from a special needs trust can provide:
- Special equipment, including mobility aids, that aren’t covered by insurance
- Therapy, rehab, home health aides and companion services
- Travel, vacations and tickets to movies, concerts and sporting events
- Electronic equipment, including video game consoles, games, computers, laptops and phones
- A car or other vehicle (purchased outright)
- A house (purchased outright)
- Ride hailing passes, bus passes and taxi fees
- Ongoing bills for nonessential items like internet service and cable
The number one rule that you have to remember is that you cannot give the money to the beneficiary directly. If you hand cash or gift cards to them, that counts as income — and that income can diminish their other benefits.
Understanding the ins-and-outs of a special needs trust can be difficult. Don’t be afraid to reach out for experienced assistance.