A Special Needs Trust (SNT) is a specific type of trust that will provide for an individual beneficiary, while still allowing that beneficiary to receive important public benefits through Medicaid and Social Security.  The beneficiary can maintain eligibility for needs-based government benefits, like Medicaid (AHCCCS and ALTCS) and Supplemental Security Income (SSI) because the beneficiary does not technically own the assets in the trust.  However, all assets of the trust must always be used for the benefit of the beneficiary.  This begs the question: How can assets in a special needs trust be used for the beneficiary?

The trustee of a special needs trust has a responsibility to utilize public benefits wherever possible.  In other words, if AHCCCS (Medicaid) will cover something, such as a medical expense, the trustee should let AHCCCS pay for that expense and not utilize trust funds to pay for it.  The funds in the special needs trust exist to otherwise supplement what public benefits do not cover.  Beyond that, the trustee has great flexibility to utilize the assets for the beneficiary’s wants and needs.  The ultimate goal of utilizing a special needs trust is to promote the beneficiary’s independence, well-being, and happiness.

By way of example, a special needs trust can cover medical expenses not covered by insurance (i.e. orthodontics, perhaps), transportation costs, entertainment, food, and shelter.* (*The trustee always must keep in mind SSI rules regarding food and shelter.)  Examples of entertainment expenditures include a specially equipped bicycle, museum passes, sporting event passes, a pet, beauty or aesthetic treatments, clothing, etc.  Transportation might consist of costs of ride providers or, when appropriate, a vehicle.  The trustee has the ability to use its discretion but is always responsible to spend funds in the best interest of the beneficiary.  Sometimes, the beneficiary might request a certain expenditure, and the trustee may exercise discretion and deny the request.  

If you or someone you know is concerned about preserving public benefits for a loved one through the use of a special needs trust, call Bivens & Associates PLLC at (480) 922-1010 or email info@bivenslaw.com to schedule a consultation.

By Megan Selvey, Attorney at Law