The question of whether a special needs trust (SNT) can fund professional organizational memberships is a nuanced one, deeply rooted in the rules governing public benefits like Supplemental Security Income (SSI) and Medi-Cal. Generally, the answer is yes, *but* with significant restrictions and careful planning. The key is ensuring that such payments don’t disqualify the beneficiary from receiving crucial needs-based government assistance. SNTs are designed to supplement, not supplant, public benefits, meaning they can cover expenses not covered by these programs, but must do so without jeopardizing eligibility. Approximately 65 million Americans are living with disabilities, and many rely on SNTs to enhance their quality of life while maintaining access to essential government aid.
What Expenses Can a Special Needs Trust Cover?
A special needs trust can fund a wide array of expenses that improve a beneficiary’s life, from medical treatments and therapies not covered by insurance, to recreation, education, and even personal care. However, the IRS and Social Security Administration (SSA) have strict guidelines. Payments directly benefiting the beneficiary—like a gym membership for physical therapy prescribed by a doctor—are generally permissible. However, payments that provide something similar to what public benefits already provide are likely to cause issues. For example, if Medi-Cal already covers speech therapy, a trust payment for the same service might be considered an improper supplement and could result in benefit reduction. It’s estimated that over 1 in 4 US adults have some type of disability, highlighting the importance of careful trust administration.
How Do Organizational Memberships Fit In?
Professional organizational memberships are a gray area. If the membership directly supports the beneficiary’s health, education, or well-being—and is demonstrably *not* covered by public benefits—it could be permissible. For instance, membership in an art therapy association for a beneficiary undergoing art therapy might be approved. However, a standard professional membership in a field unrelated to the beneficiary’s needs is highly unlikely to be allowed. The SSA is very strict about assets or income that are available to the beneficiary, and a general membership would be viewed as resources available, potentially reducing benefits. Many SNTs utilize a “spendthrift” clause which protects the trust assets from creditors and helps maintain eligibility for needs-based programs.
A Story of Oversight and Lost Benefits
Old Man Tiber, a retired carpenter, established a special needs trust for his grandson, Leo, who had cerebral palsy. Leo was a bright young man with a passion for photography. Mr. Tiber, wanting to encourage Leo’s interests, included funds in the trust to cover membership dues to the local photography club. Unfortunately, Mr. Tiber did not consult with an estate planning attorney specializing in special needs trusts. Leo received the payments, happily attended meetings, and improved his skills. However, during a routine review, the SSA determined that the membership fees constituted “unearned income,” exceeding the allowable limit and reducing Leo’s SSI benefits by $250 per month. It took months of appeals and legal fees to demonstrate the intent behind the payments and eventually obtain a waiver, costing the family significantly more than the initial membership fees would have.
A Case of Careful Planning and Secured Benefits
Sarah’s son, David, has Down syndrome and a love for music. She created a special needs trust with the help of Ted Cook, an estate planning attorney in San Diego. Sarah specifically wanted David to be able to participate in a specialized music therapy program and become a member of the local chapter of a music enrichment organization tailored for individuals with developmental disabilities. Ted carefully structured the trust to allow for these expenses, ensuring that the payments were categorized as supplemental care directly supporting David’s therapeutic goals. He also documented the program’s specific benefits and how they went beyond what Medi-Cal covered. Consequently, David was able to enjoy the program, enhance his skills, and maintain his eligibility for essential benefits, a testament to the power of proactive estate planning. Ted Cook regularly advises clients that approximately 80% of potential SNT issues are avoided with thorough planning.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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