For people with disabilities, government benefits are critical to their ability to survive and finance basic life necessities. But survival is the bare minimum, and your disabled loved one deserves the opportunity to live their life to the fullest! Unfortunately, the rules surrounding these benefits make losing eligibility far too easy when trying to supplement their income. And that’s where special needs trusts come into the picture! If you are considering setting up a special needs trust, you might be wondering, What can a special needs trust pay for in California? The answer to this question is integral to safeguarding your loved one and ensuring that they can enjoy the quality of life they deserve.
At Marcia L. Campbell, CPA, we’ve helped countless families with disabled loved ones provide them with a higher quality of life and obtain peace of mind knowing their loved one will have financial help when they are no longer around to provide it.
What is a Special Needs Trust?
Let’s dive into what this type of trust is for crucial context before we answer the question, What can a special needs trust pay for in California?
When someone has disabilities, the benefits they receive from government programs like Medicaid and Supplemental Security Income (SSI) are crucial to not only their livelihood but also their ability to enjoy the quality of life they deserve.
These government programs provide funding for special needs individuals that cover essential expenses, such as medical care, food, clothing, and shelter. However, these are “needs-based” programs, meaning if your loved one’s resources exceed a specific limit, they will be considered ineligible to receive the benefits.
This trust enables you to transfer resources into the trust instead of the bank account of the person who has special needs. Because they never legally possess the money, the resources they receive from this trust do not count as exceeding the limit, so they do not disqualify them from continuing to receive benefits.
However, to use this tool correctly and protect the livelihood and quality of life your loved one deserves, it is important to understand what a special needs trust can legally pay for.
Related Article: What is a California Special Needs Trust?
What Can a Special Needs Trust Pay for in California?
First, it’s important to understand that when you use a special needs trust, you can never take money from the trust and give it directly to the beneficiaries. A special needs trust should provide things beyond the bare minimum that their benefits afford them.
Generally, a special needs trust can serve as a lifestyle supplement and be used to pay for things like education, recreation, counseling, and medical attention that aren’t considered basic life necessities by Medicaid or SSI, such as:
- Medical and dental expenses not covered elsewhere
- A car and car maintenance
- Medical equipment like wheelchairs or specially equipped vans
- Home furnishings
- Eyeglasses
- Massages and acupuncture
- Therapy or rehabilitation
- Courses and classes
- Vacations
- Assistance with starting a business
- Legal or guardianship expenses
- Insurance
- Travel (which can include the cost of a companion)
- Transportation services (Uber, Lyft, bus or train pass, etc.)
- Recreation and entertainment (summer camps, movies, social events, sports equipment, concerts and sporting events)
- Electronic equipment, appliances, and computers
- Expenses for a companion
It’s just as important to understand what a special needs trust can’t cover to avoid violating trust law. Essentially, a special needs trust can’t pay for things that public benefits are in place to cover. A special needs trust can’t provide things like:
- Food or groceries
- Restaurant meals (unless given as an occasional gift)
- Cash
- Rent or mortgage payments
- Gift cards
- Condo or homeowner’s association fees
- Property taxes
- Certain utilities (like gas, water, and electricity)
Ultimately, when you are setting up a special needs trust to provide a loved one with the support they deserve today and years from now when you are no longer around to help them, working with professionals is essential.
Enlisting the professional trustee services of a private fiduciary will ensure proper distribution of assets per California trust law so your loved one’s wellness and happiness are never compromised. Plus, their financial acumen will ensure your loved one gets the most out of their benefits and everything is budgeted optimally.
“Simply setting up a special needs trust isn’t enough. You need a professional who can navigate the complex financial balancing act that is providing supplemental resources for a disabled loved one without disqualifying them from receiving benefits. For example, how many restaurant meals can be given before they are no longer an ‘occasional gift?’ What utilities can this trust cover? The smallest mistakes can undermine your disabled loved one’s well-being and quality of life, so hiring an experienced professional trustee is crucial.”
– Marcia L. Campbell, CPA & Private Fiduciary
Related Article: Special Needs Trusts: Consider These Things
Do You Need Help Setting Up and Managing a Special Needs Trust? With Us, Your Disabled Loved One Is Always in Reliable Hands!
So, what can a special needs trust pay for in California? In short, a special needs trust can be used to pay for comforts and amenities beyond the bare necessities their benefits cover. However, understanding the nuances of the law is essential to prevent your loved one from losing their benefits. Your loved one deserves a professional dedicated to ensuring they enjoy the highest possible quality of life so that you can rest easy knowing that they will always be in expert, reliable hands.
Get help managing a special needs trust to maximize your disabled loved one’s happiness, minimize your stress, and provide everyone with peace of mind. Schedule a consultation for premier private fiduciary and professional trustee services to get started!