Special Needs Trusts: To Spend or Not to Spend?

LisaBy Attorney Lisa Montoni Garvin


One of the more frequent questions I get from clients is, "What can Special Needs Trust funds be spent on?" The short-hand answer is that special needs trust funds CANNOT be used to purchase food, pay for routine shelter costs like rent/mortgage/basic utilities, or be spent on something for someone other than the trust beneficiary. Also, the Trustee should NEVER make a cash distribution to the disabled trust beneficiary for any reason.


Whether the client is the Trustee of a Wholly Discretionary 3rd Party Trust or a Medicaid Payback Special Needs Trust, the same distribution rules and restrictions apply. Both these types of trusts fall under the category of "special needs trusts," but are different when it comes to whose funds the Trust can/should hold.


A Wholly Discretionary 3rd Party Trust holds funds/property owned by someone else besides the disabled trust beneficiary - like monies from a parent/grandparent's estate or life insurance policy. This type of trust is usually part of a parent's, grandparent's, or other relative/friend's estate plan.


A Medicaid Payback Special Needs Trust holds funds/property that the disabled beneficiary either owns or has a legal interest in. This type of trust can only be established by a parent, grandparent, legal guardian or court.


So, what can a Trustee buy with special needs trust funds?


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October 2012 Issue 



Attorney Franklin Hickman was inducted into the Cuyahoga County Board of Developmental Disabilities' Hall of Fame.


Hickman & Lowder was once again recognized as a Green Certified Law Firm by the Cleveland Metropolitan Bar Association for our efforts in efficient energy use and "green practices."


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Drafting a Letter of Intent

November 14, 2012

6:00 p.m. - 8:15 p.m.

Penton Media Building

First Floor Conference Center

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Please join host Janet Lowder for this complimentary program. The letter of intent permits you to communicate vital information about your son or daughter to future caregivers, including what works well for your child in all major life areas: residential placement, education, employment, socialization, religion, medical care, and final arrangements.  Writing a letter of intent is a critical step in the planning process.


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