Success is a careful process attained one goal at a time...
THE SPECIAL NEEDS TRUSTS $2,000 RESOURCE
Resources and Allowable Expenses
By Marisa A. Corvisiero, Esq.
Special Needs Trusts are normally set up for the benefit of
a disabled person or someone over the age of 65 who is eligible for SSI and
Medicaid benefits. Individuals who are eligible for such benefits are
restricted to owning less than $2,000 worth of countable resources. If their
resources exceed $2,000, or $3,000 for a couple, they will lose eligibility to
receive such benefits. Countable resources are cash or any assets that can be
converted to cash by sale. These include a vacation home, stocks, bonds, bank
accounts, second car, etc. Accordingly, one's primary residence, principal
vehicle, furnishings and personal effects, life insurance policy and/or moneys
reserved for funeral expenses (as long as the face value does not exceed
$1,500) are excluded from the said limit.
The trustee can work around this cap by directly paying for
most of the beneficiary's needs that are not covered by the governmental
benefits, such as out of pocket medical and dental expenses, and most other
support and maintenance expenses such as utilities, professional services,
etc.A trustee therefore should not give
the beneficiary a gift of cash or an allowance, because the same can be
deducted from the beneficiary's benefits. Instead a trustee can take the
beneficiary shopping and/or pay for the expenses directly.
Payments for food and shelter however, can be considered
income to the beneficiary even if the trustee pays for them directly. This is
called In-Kind Support and Maintenance, or ISM, and is treated as income by the
SSI program.SSI benefits are issued to
those in need for support and maintenance, so if the beneficiary receives
assistance from the trust to pay for ISM, the amount is deducted from the SSI
monthly benefit. The good news is that the amount of the deduction is limited
to $245. So even if the beneficiary spends a $1000 per month on rent and food,
the SSI benefit will only be reduced by $245 dollars.