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Spending Guide for the Trustee

 

PLEASE NOTE: this page is a bit out of date. For example, debit card arrangements are better now. We will be including information about expanded Medicaid soon.

The following is intended to help sort out the limits that are imposed on Trustees of Special Needs Trusts in order to maintain beneficiary eligibility for public benefits.

If a recipient is not on SSI, there are fewer restrictions on spending. Many trust beneficiaries receive Medicaid but not SSI.

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Limits On Trustee Spending Decisions
Benefit	Affects a benefit	No effect on a benefit
Supplemental Security Income SSI	Money given directly to beneficiary. Groceries Gas, electric, water bills Rent/Mortgage Anything that can be turned into cash, food or shelter, including credit cards and most gift cards Property Taxes or Homeowner’s insurance when beneficiary (not the trust) is owner Exception: Food and rent/mortgage, etc.  may be supplied if a 1/3 reduction in the SSI grant is accepted each month these are supplied.	Cable, phone clothing Travel expenses Personal care Maintenance of house owned by beneficiary Food for special occasions like restaurant meals or contributions to holiday feasts Specialized or adaptive equipment
SSI  Home Ownership   {See below re: trust owned homes]	Mortgage payments Mortgage payments on a client owned home are treated as in-kind income. Mortgage payments on  trust owned home are treated the same, unless the client is charged rent.	Residence rent free in a home owned free and clear by the trust has no impact on eligibility.
Medicaid	A person receiving Medicaid but not SSI has only one major trust disbursement limit: Money given directly to Beneficiary, including credit cards and most gift cards. Reimbursement to the Beneficiary, even for allowable expenses, IS money to the beneficiary and so is treated as income.	All spending other than money given directly to a beneficiary is allowed under Medicaid rules.
Social Security: Social Security Retirement Social Security Disability Social Security Survivors Social Security Disabled Adult Child(SSD, SSDI,SSA)	No Limitation, no spending from a trust can affect eligibility
Medicare	No Limitation
General Assistance Unemployable (GAU)	Money given directly to beneficiary	Payments to vendors for food, clothing shelter. Essentially no restrictions. Note, however, SSI back-payment provisions for GAU in Public Entitlements Overview. A GAU recipient who ultimately is found eligible for SSI and receives a back-payment will have the amounts paid for food, clothing and shelter computed and deducted from the SSI back-payment, to a maximum of the monthly SSI amount.

.*******S*SSI rules on home ownership are found in the POMS (Program Operation Manual System) for SSI.

POMS SI01130.100 provides that an individual’s home, defined as property in which he or she has an ownership interest and that serves as his or her principal place of residence, regardless of value, is an excluded resource. This means that the value of the house it does not affect SSI eligibility. SI01110.515C provides that a beneficiary in a trust may not have legal title to the assets of the trust, but does have “an equitable ownership interest” in the trust.

 

Purchase of trust property. The sections referenced above mean that the purchase of a home or condo for the beneficiary does not create in-kind income and is an “exempt resource” for purposes of SSI eligibility. This can be highly beneficial to the client, and is often the first consideration when handling a newly created trust.Home ownership confers many tangible and reputational benefits.

BEWARE however. It does occur that the purchase of property does not work out. For example, If the resources of the trust cannot cover property expenses, along with other requirements of the client, for the long term this may be a decision that is regretted later.

Typically, the fees the trustee charges are increased considerably due to the due diligence required to hold and maintain property.

The urge to have a home of ones own is strong in everyone, and often time even more so for beneficiaries of newly funded trusts who commonly have had unsettled lives due to lack of resources. But the usual considerations should be made: is the client committed to remaining in place for 5 or so years, for instance? The client may simply not be able to conform to reasonable expectations for use of the property or acceptable behavior. If the motivation to purchase property is one or more evictions of the client for unacceptable behavior, and especially for property damage, this is not a good candidate for home purchase.  The trustee should obtain a rental agreement that creates a landlord tenant relationship so that, if necessary, the beneficiary can be evicted. Without such a written agreement, the clients beneficial interest in the property confers rights that can be difficult to overcome. .