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Berge & Berge, LLP Blog

Saturday, October 13, 2018

What Types Of Things Can Special Needs Trusts Be Used To Pay For?

A special needs trust allows you to preserve a family member’s eligibility for government benefits and supplement those benefits. A First Person Special Needs Trust is used to hold title to property that is owned by someone with special needs. A Third Party Special Needs Trust is funded by other assets, such as an inheritance or court settlement.

If a special needs trust is not drafted and funded very carefully, the person may not be eligible for Medicaid and other government benefits. A California special needs planning lawyer assists individuals in drafting special needs trusts so that the trusts do not interfere with government benefits. In addition, an attorney can explain to family members and the trustee how the trust funds may be used to benefit someone with special needs.

Allowable Payments From a California Special Needs Trust

Drafting and funding a special needs trust is just one of the areas that can require the guidance of a California special needs planning lawyer. Another area that requires guidance and legal counsel is disbursements from the special needs trust. The trust must be designed to supplement government benefits to protect eligibility for Medi-Cal, SSI, and other government benefits.

Payments and distributions from the special needs trust that typically do not impact the person’s eligibility for government benefits include:

  • Medical equipment or services that are not covered by Medi-Cal
  • Reasonable expenses for a caregiver, including family members
  • Household expenses, other than utilities, food, mortgage, rent, and property taxes
  • Prepaid burial and funeral expenses provided the payments are made before the beneficiary’s death
  • Payment for reasonable personal care services and domestic services, such as grooming, housekeeping, and meal preparation
  • A vehicle for transporting the beneficiary
  • Computer, television, internet service, and other electronic equipment for the beneficiary’s use
  • Recreational or academic courses or classes
  • Yard and lawn maintenance and services
  • Clothing, towels, linens, and bedding
  • Home security monitoring and alarms
  • Personal care items
  • Non-food items and sundries
  • Service animal expenses including supplies and veterinary services
  • Telephone and telephone service
  • Cost of transportation (bus, fuel, taxi, etc.)
  • Therapies and other medical costs that are not covered by other benefits
  • Over-the-counter medications and medical supplies not covered by other benefits
  • Reasonable compensation for the trustee and professional services including accountants, advocates, investment advisors, attorneys, etc.

In addition, there is often a “catch-all” category of items that the Trustee deems appropriate and necessary for the sole benefit of the beneficiary. A California special needs planning lawyer can provide guidance and assistance in determining if an expense or distribution is allowable under the terms of the special needs trust. If a trustee has any questions or doubts whether a distribution is allowable, it is always best to seek the advice and counsel before making the payment to avoid any potential problems with Medi-Cal or other government benefits.

Contact A California Special Needs Planning Lawyer for Customized Advice

If you have questions about a special needs trust for your family member, we encourage you to schedule a consult with the California special needs planning lawyers at the Law Offices of Berge & Berge today.


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