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How to Use a Special Needs Trust


Special needs trusts are guided by different policies in each state which can drastically affect how the trust may be used. It is important that a reliable special needs trustee manages the trust in accordance with policies and uses proper discretion when distributing the trust. Setting realistic and reasonable expectations regarding the trust with the beneficiary are also advised, so everyone is on the same page.

Here are some basic guidelines for how a special needs trust should be used:

  • When distributing trust funds, it must be done solely for the benefit of the beneficiary, in the beneficiary’s best interest.
  • The trust must be used as a supplement, not replacement, for governmental benefits and can not pay for anything provided by governmental benefits such as income, housing, medical benefits and food.
  • Needs that can be satisfied by programs and entities other than the trust should be met with said resources.
  • The trustee must pay close attention to distribution and make sure the trust is a back-up for paying for basic needs.
  • The trustee can issue funds from the trust to pay for basic needs if there is an emergency affecting the well-being, health, or safety of the beneficiary. Know that doing so may affect the beneficiary’s eligibility for other important benefits.
  • If an adult beneficiary lives with his or her parents, the SSI check received may be reduced because living with parents is provided and outweighs the loss of income the check would have provided.
  • Trust funds can help purchase a home or transportation for the beneficiary.

Professional guidance should be sought whenever making big decisions regarding the trust, this way you can minimize any negative potential impact and maximize benefits for the beneficiary.

Read more about special needs trusts.

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