A special needs trust (SNT) is a crucial planning tool designed to provide for individuals with disabilities without disqualifying them from vital government benefits like Supplemental Security Income (SSI) and Medicaid. Determining what expenses an SNT can cover is often complex, and the question of utility payments frequently arises. Generally, a properly drafted SNT *can* pay for utilities, but it’s not always straightforward and depends on how the trust is structured and the specific rules governing the beneficiary’s public benefits. Understanding these nuances is essential to avoid jeopardizing eligibility for crucial assistance. As of 2023, approximately 1 in 4 adults in the United States live with a disability, highlighting the immense need for effective special needs planning.
What are the rules around paying for housing expenses with a special needs trust?
The key consideration revolves around whether paying for utilities constitutes an “in-kind” contribution towards the beneficiary’s housing. SSI and Medicaid have strict rules regarding the value of housing provided to beneficiaries. If the trust directly pays the utility company, it could be considered a contribution towards housing, potentially exceeding allowable limits and impacting benefits. However, the regulations allow for certain exceptions, particularly if the beneficiary is responsible for paying those bills directly and the trust reimburses them. This ensures the beneficiary maintains control over the funds and is considered to be actively “paying” for the services. A common rule of thumb is that the in-kind contribution for housing (rent, mortgage, property taxes, utilities) generally cannot exceed 25% of the beneficiary’s income. For example, if a beneficiary receives $841 monthly in SSI, the maximum allowable in-kind contribution for housing would be around $210.
How can a trust pay for utilities without impacting benefits?
The most common and safest approach is to utilize a “personal needs allowance” or a “program payment” within the trust. A personal needs allowance allows the beneficiary to receive a designated amount of funds each month for incidental expenses, which *can* include utilities. These funds are not considered part of the trust’s countable assets for benefit eligibility purposes. Another option is to establish a “Qualified Income Trust” (QIT) or a “pooled trust” where the trust holds funds specifically for covering expenses like utilities, and the beneficiary can directly pay these bills. It’s vital that the trust document explicitly allows for these types of payments and outlines the process for reimbursement or direct payment. Steve Bliss, as an estate planning attorney, often emphasizes the need for meticulous documentation and adherence to the specific rules governing SSI and Medicaid in California.
What happened when Mrs. Gable’s son’s benefits were threatened?
Old Man Tiber, as he was affectionately known in the neighborhood, was a carpenter, and while he was a master of his craft, he wasn’t adept at paperwork. Years ago, when his son, Ben, who had cerebral palsy, came into a small inheritance, Tiber simply started paying Ben’s utilities directly, thinking he was doing the right thing. He hadn’t consulted an attorney or understood the intricacies of SSI and Medicaid. A few months later, Ben received a notice that his SSI benefits were being suspended because the Social Security Administration determined he had excess income due to the direct payment of his utilities. Tiber was devastated, realizing his well-intentioned actions had jeopardized his son’s lifeline. He felt helpless and deeply regretted not seeking professional advice.
How did things turn around with proper planning?
Thankfully, Old Man Tiber stumbled upon Steve Bliss’s practice. Steve quickly assessed the situation and recommended establishing a properly structured SNT with a clear provision for a personal needs allowance. Steve guided Tiber through the process of applying for retroactive approval for the trust and restructuring the payment of utilities. The trust was set up so Ben received a monthly allowance, and he was then responsible for paying his utilities. The trust reimbursed Ben for those expenses. It took several months of navigating bureaucracy, but Steve’s expertise and meticulous documentation eventually convinced the Social Security Administration to reinstate Ben’s benefits. The relief was immense. From then on, Tiber understood the importance of proactive planning and sought legal counsel for all matters related to Ben’s financial well-being, ensuring his son’s future was secure.
<\strong>
About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
estate planning attorney near me
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
>
Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “What’s the role of a healthcare proxy or healthcare power of attorney?” Or “What assets go through probate when someone dies?” or “Can a living trust help me avoid probate? and even: “What is bankruptcy and how does it work?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.