Throughout my eighteen years working with Special Needs Trusts and beneficiaries, the most common request I receive from beneficiaries is, “How come I (beneficiary) cannot get cash or funds for myself, it’s my money.”
CPT as 501(C)(3) non-profit Trustee, must follow and understand specific rules and regulations provided by the Social Security Administration (SSA). If the trustee makes a distribution of any kind to or for the beneficiary as some form of income, SSA will count the distribution against the beneficiary. In turn, which could cause a loss or reduction in the beneficiary’s benefits. Every distribution invested or spent is maintained accurately in an event the SSA or other government entity requests proof of disbursements given for a specific beneficiary.
In reference from Kevin Urbatsch's (a Certified Specialist in Estate Planning, Trust, and Probate Law) book, Administering the California Special Needs Trust: A Guide for Assisting a Person with a Disability as Trustee of a Special Needs Trust, he states, “the most common mistake that trustees make is giving money directly to the SNT beneficiary.” If the trustee gives money directly to a beneficiary the SSA considers this to be unearned income and will reduce the beneficiary’s benefits dollar-by-dollar. Even if the beneficiary uses his or her own money to purchase an item, he or she cannot reimburse themselves, it will still be considered unearned income by the SSA.
In order to avoid any loss or reduction in benefits, CPT as Trustee, pays vendors directly for goods or services. In addition, CPT as Trustee, provides beneficiaries the opportunity to obtain a secured credit card, if eligible with a bank, to use the secured credit card to purchase items for their sole benefit only and have their Special Needs Trust pay the credit card if all required documentation, statements, receipts, invoices are attached.
William E. Lindahl, MBA, CLPF