If you are the parent of a special-needs child, one of the most important things you can do for his or her future is set up a special needs trust. It is likely that your disabled child has supplemental security income, or SSI, but extra funds of any sort have the potential to affect this income.
Supplemental Security Income is not only important due to cash flow, but also due to access to Medicare benefits. It is important to understand how SSI and special needs trusts interact to avoid invalidating your child’s benefits. According to Special Needs Answers, the recipient of a special needs trust should never have cash directly from the trust to pay for anything, including food or shelter.
What is the relationship between SSI and trust funds?
There is a $1 to $1 relationship between any funds an SSI beneficiary receives and SSI funds. Essentially, for every dollar that the recipient receives, the government will reduce benefits from SSI the exact same amount.
This means that any special needs trust should never directly give the recipient cash in hand for any reason.
How can the recipient use trust funds?
The best way to utilize trust funds is to look for ways to pay for goods and services independent of the recipient. That is, the trust should pay rent directly to a landlord, not give the money to the recipient as an intermediary. This way, the recipient has the best chance of benefiting from the trust funds without potentially losing their SSI.
It may be smart to use SSI funding to pay for necessary assets like food, shelter, and utilities. The recipient may then use SSI funds for other purposes.