When you have a child with special needs, you’re always worried about their future. A special needs trust is often recommended to parents who want to provide for their adult child without negatively affecting the child’s entitlement to social services like Medicaid and Supplemental Security Income.
However, it doesn’t take much investigation to realize how complicated the rules are surrounding how you can use the money in a special needs trust. In fact, there are so many rules on how the funds cannot be used that it’s often hard to figure out how you can spend it.
You have more options than you probably realize
You cannot give the beneficiary of a special needs trust any money directly (otherwise, it counts as income). You also cannot use the money to pay their ordinary living expenses, including food and shelter — because SSI is designed to cover those.
You can, however, use the money in numerous ways to increase your child’s comfort. Here are some examples of what you can buy:
- Adaptive equipment, like a special wheelchair
- Educational needs and training
- Hobby items, like painting supplies
- Recreation, whether that’s tickets for a movie or a ballgame or a vacation
- Electronics, like an e-reader or a tablet
- Bus passes and pre-paid services for Uber or Lyft
- A home of their own
- In-home caregiver services not covered by medical insurance
The odds are high that you and your spouse will control the distributions from your child’s special needs trust at first — but you will, eventually, need a successor trustee. It’s essential to make sure that you carefully discuss the restrictions with potential successor trustees to avoid future problems for your heir.