Special Needs Trusts can
provide an enhanced quality of life to individuals with disabilities without
impairing their public benefits. In this Analysis, Professor Rebecca Morgan, former
President of NAELA, examines some special issues that can be encountered in
this area, such as working with a structured settlement broker, the "sole
benefit" rule, and the beneficiary's role in decision-making. She writes:
§ 7.03 Special Issues in Administration
 Spending Issues
Many trust expenditures are
commonplace-caregiving services, assistive devices, technology, travel,
clothing, etc. Often, however, a trustee will receive unusual requests for
spending from the SNT. In addition to the issues involving continuing
eligibility for public benefits, the sole benefit rule and the rules regarding
in-kind support and maintence (ISM), the trustee needs to consider, among other
things, the amount of money in the SNT, market conditions, the continued
availability of family caregivers (if any), the unique needs of the beneficiary
and the life expectancy of the beneficiary. Budgeting is an important part of
determining expenditures and can provide a framework for the trustee in
reviewing expenditure requests.
 Quality of Life
The beneficiary may be able to engage in
social activities that would enhance the beneficiary's quality of life. The
trustee may be asked to pay for vacations, dues in organizations, movie
tickets, hobby supplies, companionship, therapies and more. Reasonable expenses
for such would be appropriate. The trustee should include these expenses in
developing the budget.
With vacations, the trustee needs to determine
if the expenses are reasonable, the trip will be appropriate for the
beneficiary (such as whether the venue is accessible), how the beneficiary will
travel (car, plane, etc.), and whether the trust can pay for someone to
accompany the beneficiary on the vacation. Usually the trust will need to
arrange for direct payment of vacation costs, including pre-paid hotels,
airfares and other transportation costs, and even meals. One common issue that
the trustee will face is when the family asks that the trust pay their expenses
on vacation as well. The logic of this, from the family's perspective, is
usually that since this is a family vacation, they all need to accompany the
beneficiary on vacation (perhaps to provide care for the beneficiary) or the
beneficiary wants them to be there. The trustee would be able to pay for
reasonable expenses for a vacation for a beneficiary. In the case of a
(d)(4)(A) SNT, there may be a limit on the number of companions whose expenses
may be paid by the trust, depending on the beneficiary's needs. The impact that
such expenditures may have on public benefits eligibility must be considered,
as well as the treatment of such expenditures, if not done correctly.
F. Policy-For The Benefit Of/On Behalf Of/For The Sole Benefit Of An
1. Trust Established for the Benefit of/on Behalf of an Individual
Consider a trust established for the
benefit of an individual if payments of any sort from the corpus or income
of the trust are paid to another person or entity so that the individual
derives some benefit from the payment.
Likewise, consider payments to be made on
behalf of, or to or for the benefit of an individual, if payments of
any sort from the corpus or income of the trust are paid to another person or
entity so that the individual derives some benefit from the payment.
For example, such payments could include
purchase of food or shelter, or household goods and personal items that count
as income. The payments could also include services for medical or personal
attendant care that the individual may need which does not count as income.
NOTE: These payments are
evaluated under regular income-counting rules. However, they do not have to
meet the definition of income for SSI purposes to be considered to be made on
behalf of, or to or for the benefit of the individual.
If funds from a trust that is a resource are
used to purchase durable items, e.g., a car or a house, the individual (or
the trust) must be shown as the owner of the item in the percentage that
the funds represent the value of the item. When there is a deed or titling
document, the individual (or trust) must be listed as an owner. Failure to do
so may constitute evidence of a transfer of resources.
(footnotes and citations omitted)
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