The question of whether a special needs trust (SNT) can cover the costs of on-call transportation services is a common one, and the answer is generally yes, *but* it requires careful consideration of the trust’s terms, the beneficiary’s needs, and relevant regulations to ensure compliance and avoid jeopardizing public benefits like Supplemental Security Income (SSI) and Medi-Cal. SNTs are powerful tools designed to provide for individuals with disabilities without disqualifying them from crucial government assistance programs. Properly structured, these trusts can cover a wide range of expenses, including transportation, but the specifics matter greatly. Approximately 65 million Americans identify as having a disability, and access to reliable transportation is a significant barrier to their independence and quality of life.
What Expenses *Can* a Special Needs Trust Cover?
A properly drafted SNT can indeed pay for transportation costs, but the type of transportation and how it’s arranged are crucial. Regular, routine transportation, like bus fares or taxi rides, are generally permissible expenses. However, the trust must avoid providing anything that could be construed as “support and maintenance” which could disqualify the beneficiary from needs-based benefits. This is where on-call services like Uber, Lyft, or specialized non-emergency medical transport (NEMT) come into play. As of 2023, the average cost of NEMT is around $250 per trip, and for those requiring frequent medical appointments, these costs can quickly escalate. The key is to ensure the transportation is tied to specific, documented needs—medical appointments, therapy sessions, employment, or participation in approved activities—and is not simply for general convenience. Furthermore, documenting these expenses with receipts and records is essential for trust administration and potential audits.
How Do I Avoid Jeopardizing Public Benefits?
The SSI program, a crucial safety net for individuals with disabilities, has strict income and resource limits. If a trust distributes funds directly to the beneficiary, those funds are considered income and can reduce or eliminate their SSI benefits. Therefore, the trust should *directly* pay the transportation provider, not reimburse the beneficiary. This ensures the funds aren’t considered available to the beneficiary. For example, the trust can have a pre-arranged account with the transportation provider or pay for each trip as it occurs. The Social Security Administration (SSA) has specific rules regarding trusts and benefit eligibility, and compliance with these rules is paramount. The SSA provides several program operating manual sections (POMS) relating to SNT’s, and it’s wise to understand them. It’s estimated that over 10% of SSI recipients experience benefit reductions due to improperly managed trust assets.
What Happened When Mrs. Davison Didn’t Plan Ahead?
Old Man Tiberius, a retired carpenter, cherished his granddaughter, Lily, who had cerebral palsy. He established a SNT to ensure she had the resources she needed to live a full life. However, he didn’t specify how transportation would be handled. After Tiberius passed, Lily, now an adult, relied on her mother for all transportation. Her mother, though loving, had a demanding job and struggled to get Lily to her weekly therapy sessions and art classes. Eventually, Lily started missing appointments, which impacted her progress. The family, desperate for a solution, started using ride-sharing services, and Lily’s mother would front the money, expecting reimbursement from the trust. This created a complicated situation, and the SSA flagged the reimbursements as income, temporarily suspending Lily’s SSI benefits. It was a stressful time for the family, highlighting the importance of proactively addressing transportation needs within the trust document.
How Did Mr. Chen Prevent a Similar Issue?
Mr. Chen, a tech entrepreneur, established a SNT for his son, Alex, who has Down syndrome. Aware of the potential challenges, Mr. Chen not only funded the trust generously, but he also worked closely with Steve Bliss, his estate planning attorney, to create a detailed transportation plan. The trust established a direct account with a specialized NEMT company, and all appointments were scheduled and paid for directly through the trust. Alex’s caregiver communicated directly with the NEMT provider, ensuring seamless transportation to his job, therapy, and social activities. Furthermore, the trust document explicitly outlined the parameters for transportation expenses, providing clear guidance for the trustee. Because of this foresight, Alex enjoyed consistent, reliable transportation, maintained his SSI benefits, and lived a more independent, fulfilling life. He became a passionate advocate for accessible transportation, proving that with careful planning, individuals with disabilities can thrive.
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About Steve Bliss at Wildomar Probate Law:
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Feel free to ask Attorney Steve Bliss about: “Can estate planning help protect a loved one with special needs?” Or “Can an executor be removed during probate?” or “Can I put jointly owned property into a living trust? and even: “Can bankruptcy stop foreclosure on my home?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.