On Tuesday, December 13, 2016, the President signed into law the Special Needs Trust Fairness Act. What is it? This specific Act fixes an error in existing law that indicated that all individuals with disabilities lacked mental capacity to handle their own affairs. The former law presented an issue, it prevented individuals with disabilities from being permitted to establish their own trusts. For individuals to be allowed to establish a Special Needs Trust, the trust needed to be established by a parent, grandparent, legal guardian, or the court for establishing the trust or establishing a pooled trust.
The answer to this question depends on if a beneficiary is receiving Supplemental Security Income (SSI) or Medi-Cal (Medicaid program for California). If a beneficiary receives Supplemental Security Income (SSI) then there is no negative effect on a beneficiary’s Supplemental Security Income (SSI) benefits or eligibility.
If a beneficiary receives Medi-Cal (California Medicaid Program) benefits only he/she is obligated to report specific changes to the Medi-Cal regional office that serves his/her county of residence.
What is unearned income? Per the Social Security Administration (SSA) and the rules pertaining to Supplemental Security Income (SSI), any amount of money received (not earned) by a beneficiary who receives SSI benefits is referred to as unearned income. If a beneficiary receives any money will reduce a beneficiary’s Supplemental Security Income (SSI) benefits on a dollar-for-dollar basis.
There are times where beneficiaries are unable to travel due to not having the appropriate assistance to deal with all the factors associated with attending special events or going on a vacation (includes international travel, cruise, etc.) that they have always wanted to go on. When a beneficiary would like to travel, but cannot do so alone, he/she will ask the Trustee, CPT, to use the special needs trust to pay for his/her companion so that he/she can travel without worry, elevated stress, and can travel with safety.
It is important for beneficiaries who receive Supplemental Security Income (SSI) to know that there are some rules that they should be aware of in regards to traveling. Per the Social Security Administration (SSA), there is a calendar month requirement that specifies that “an individual is ineligible for Supplemental Security Income (SSI) benefits for any month during all of which he or she is outside the United States.”
Can I Use My Special Needs Trust to Make Gifts to Family, Friends, Donations, Fundraisers, or Charities?
Holidays are around the corner, and other significant life events such as family celebrations, or graduations are times to celebrate. During such occasions, beneficiaries may want to purchase or give to their loved ones. However, a beneficiary who has established a First-party Special Needs Trust, such as with CPT, such disbursements will always be prohibited.
A common question by beneficiaries is related to their pets. “Can my Special Needs Trust pay for a pet or provide care for my pet? The answer to this question is yes, of course! Disbursements made from a beneficiary’s Special Needs Trust for his or her pet(s) will not interfere or jeopardize a beneficiary’s Supplemental Security Income (SSI) or Medi-Cal (California Medicaid Program). Making disbursements for the beneficiary’s pet(s) does not violate the sole benefit rule for a First Party Special Needs Trust.
Entitlement Public Benefits vary from Needs-Based Public Benefits in that an individual’s resources and income are not considered for eligibility. These types of benefits are usually paid for with taxes from working or being employed. These types of benefits would not require a Special Needs Trust, and disbursements made from a Special Needs Trust would not interfere or impact the individual’s entitled benefits.
William E. Lindahl, MBA, CLPF