Administration of a Special Needs Trust

Individuals with disabilities often receive governmental assistance to maintain their quality of life. A Special Needs Trust is used to supplement, not replace, public benefits such as SSI or Medicaid. The Trustee of a Special Needs Trust spends the funds within the trust for the benefit of the beneficiary if the trust while carefully considering and monitoring the impact of such expenditures on the beneficiary’s entitlement to public benefits.

What You Need to Know

Even if a trust is properly established and funded, if the Trustee improperly spends the income or principal of the trust, the public benefits of the beneficiary could be reduced or eliminated. For example, if cash is paid directly to a beneficiary, it may reduce or eliminate the SSI benefit.

A Trustee should be familiar with investment standards and the expectations for maintaining trust records. The Trustee should also be aware of the tax ramifications of distributions made from the trust.

A Trustee should be familiar with the types of public benefits available, the actual benefits received by the trust beneficiary and the requirements of the public benefits, such as SSI, SSD, and Medicaid. The Trustee should also be familiar with other types of assistance for which the beneficiary qualifies, so that the Trustee does not waste trust assets on items that would otherwise be payable by public benefits. The trust assets should only be used to purchase something that cannot be purchased with public benefits and which, if purchased, will not jeopardize the individuals’ benefits.

Source: National Academy of Elder Law Attorneys, NAELA.org