What expenses can a special needs trust pay?

If your child has certain physical, mental or emotional disabilities, he or she simply may not be able to work. This, of course, means your son or daughter is likely to need some financial assistance throughout his or her life. Fortunately, federal, state and local governments provide financial assistance to many individuals with disabilities who qualify for it.

According to the U.S. Bureau of Labor Statistics, the cost of most consumer goods has skyrocketed by roughly 9.1% in the last year alone. While recipients of means-tested public benefits are apt to see a slight increase in benefits, payouts are sure to remain meager. Often, recipients only have enough for low-income housing, food and basic medical care.

Special needs planning

The thought of your son or daughter trying to live on extremely limited public benefits may make you shudder. To ensure he or she has a higher quality of life as an adult, you may want to do some special needs planning. Specifically, you may choose to establish a special needs trust, naming your son or daughter as the beneficiary.

With a special needs trust, your child uses funds in the trust for certain expenses while still qualifying for valuable, albeit modest, public benefits. Still, your son or daughter may not use disbursements from the special needs trust to pay for any of the same expenses public benefits traditionally cover.

Appropriate expenditures

Generally, funds in a special needs trust can pay for expenses that make life a little bit better. Using the funds to cover education, travel, home and vehicle improvements, electronic equipment and other similar expenses is usually ok. That is, paying for these supplemental expenses is not likely to jeopardize your child’s eligibility for public help.

Ultimately, with some proactive special needs planning, you ensure your child receives what he or she needs both to survive and to thrive.