Having a disability can make life challenging. If a medical condition, illness or injury prevents working, though, a disabled person may have trouble paying living expenses, medical bills and other costs. While needs-based government assistance, such as Supplemental Security Income or Medicaid, may provide a safety net, it does not cover many of the expenses that make life worth living. 

If you have a disabled relative, you may want to help. You do not, however, want to interfere with the individual’s eligibility for public assistance. A special needs trust may be the answer. This type of trust holds funds for the benefit of your disabled loved one without transferring ownership to him or her. As such, disbursements typically do not affect government assistance. 

Not all uses are acceptable 

If your primary goal is to improve the quality of life for your disabled loved one while not harming his or her eligibility for government benefits, you must understand disbursement restrictions. Put simply, not all uses of special needs trust funds are acceptable. Here are a few things the beneficiary typically may not purchase with funds from the special needs trust: 

  • Groceries or restaurant meals 
  • Mortgage or rent 
  • Utilities 

These items have a common characteristic: They are necessary expenses. Funds from the special needs trust should supplement what is necessary. For example, a person likely may use disbursements from the trust to pay for comfort, luxury and recreational items. 

A good trustee can help 

Naming a qualified trustee is one of the advantages of establishing a special needs trust. The trustee can oversee expenditures to ensure they do not interfere with public assistance. Additionally, the trustee can help a disabled person better manage his or her financial resources. Either way, the special needs trust protects both your contribution and your disabled loved one’s interests. 

Improving the quality of life for a disabled person is an admirable goal. A special needs trust helps you achieve this objective. Still, before setting up one, you must think carefully about using funds from the trust.