Any parent with a special needs child worries about what will happen to them when they, the parents, die or can no longer provide care. Many mentally or physically disabled children will go on to lead long and full lives, well after we pass on. Before we are gone, though, there are steps we can take to ensure their safety, stability, and happiness. One of those steps is to establish a “Special Needs Trust,” or SNT. A SNT is an account you can put money in to pay for all the extras your child needs, without that money counting as their own and therefore endangering their eligibility for government benefits; and a trustee, not your child, decides how it is spent. You already know how expensive it can be to provide good care for your child, and although government benefits are helpful, they don’t usually cover the entire cost of the spectrum of services you want your child to have.
Once you have used up the government benefits, there’s a pretty wide variety of ways you can spend the SNT. The SNT funds can be spent not just on medical care, but also on services and activities that improve your child’s “quality of life.” Here are just a few examples:
- An aide to help your child with daily living activities, such as bathing, cooking, or shopping;
- A vehicle (and its maintenance) to facilitate your child getting around;
- Renovations to their living space to make it more accessible or useful;
- Fees for a communal or assisted-living facility;
- Recreational activities, field trips, hobby equipment, and vacations;
- Classes, both educational and vocational;
- Acquisition and care of a service animal;
- Professionals such as attorneys or accountants to handle non-care needs.
The SNT can be used for anything you would say is for the primary benefit of the child. Do they need specially-tailored clothing that accommodates their disability? Maybe you want to send them to a special summer camp, or invest in a technology that will allow them to more fully communicate. Or maybe you need a break from being the full-time caregiver, and you want to hire respite help for a few days. These are all valid SNT expenditures.
But keep in mind that just because the SNT can be used to cover a wide variety of expenses does not mean it can be used indiscriminately. A SNT is designed to supplement the benefits being received from the government, not replace. Record-keeping should show that the government benefits are paying for basics like food, shelter, and a minimum of medical care. Here are a few examples of things the SNT probably should NOT pay for:
- Cash handed to the beneficiary. Cash counts as income to the beneficiary, even if they turn around and use it to pay for a supplemental service. Too much cash handed over could jeopardize eligibility for benefits. In the case of payment for services, the trust should pay the provider directly.
- Food, rent, and tax payments. If you want to use the SNT to afford a higher rent at a nicer facility, that’s allowed, but these basic cost-of-living bills should first be covered by government benefits.
- Recurring utility bills. Like with food and rent, the government benefits should also be used first for electricity and water. If you want to use the SNT for an expansive cable TV package, or high-speed internet, because you believe these are important to the beneficiary’s quality of life, that’s likely allowed.
- Otherwise justifiable expenses that unduly deplete the account. If there simply isn’t a great deal of money in the trust, expensive items or services are not allowed if they endanger the lifespan of the trust. Although your child would undoubtedly benefit from, say, a trip around the world, if the cost significantly depletes the bottom line of the account, it is not allowable.
A well-crafted SNT, one that anticipates the type of expenses the beneficiary is likely to encounter, is the best answer to questions about allowability. Some rules differ by state, and some may be different depending on the nature and extent of the beneficiary’s disability.
Questions about how your child is going to manage in life after you are gone can be really scary, and as a result, it’s human nature to delay contemplating them. But keep in mind that the worst outcomes are when no plans at all have been made. Isn’t that scarier? One of the best ways you can insure your special needs child is well taken care of in the future is to plan for it right now. I can help you tackle these tough questions and together we will make sure your child’s future is something you don’t have to worry about quite so much.
Susan Sandys can help you put together legal documents to protect your special needs child. Call today to set up a free consultation.