The question of whether a special needs trust can cover expenses like resume-building software is surprisingly complex, and hinges on the specific terms of the trust, the beneficiary’s situation, and applicable regulations. Generally, special needs trusts (SNTs) are designed to supplement, not replace, government benefits like Supplemental Security Income (SSI) and Medicaid. Therefore, any expenditure must align with maintaining the beneficiary’s health, safety, and quality of life *without* disqualifying them from these crucial programs. Resume-building software, at first glance, might seem like an ineligible expense, but a closer look reveals it can often be justified, particularly when tied to a demonstrable goal of increasing the beneficiary’s independence and potential for self-sufficiency.
What are the core limitations of spending from a Special Needs Trust?
The most significant limitation is the prohibition against directly funding needs that Medicaid or SSI already cover. These programs provide basic necessities – food, shelter, medical care – and the trust cannot be used to duplicate those benefits. Approximately 68% of individuals with disabilities rely on SSI as a primary income source (Source: Social Security Administration, 2023 data). However, SNTs *can* cover expenses that enhance the beneficiary’s quality of life *beyond* what those programs offer. This includes things like education, recreation, and – crucially – opportunities to increase their employability. It’s not simply about *wanting* something; it must contribute to the beneficiary’s well-being or future independence. Trustees must document these expenditures meticulously to demonstrate compliance with the trust’s terms and relevant regulations.
How does employment potential factor into SNT eligibility?
Here’s where resume-building software can become a justifiable expense. If the beneficiary is actively seeking employment, the cost of the software can be framed as an investment in their ability to find a job and become more financially independent. This aligns with the overarching goal of many SNTs: to improve the beneficiary’s long-term prospects. “A key principle of special needs trusts is to enable the beneficiary to live as independently as possible, and employment is a critical part of that,” says a leading estate planning attorney specializing in SNTs (Source: National Academy of Elder Law Attorneys, 2022). The trustee should retain evidence of the job search – applications submitted, interviews attended – to support the claim that the software expenditure was directly related to these efforts.
Could a purchase like this jeopardize Medicaid or SSI benefits?
The risk of jeopardizing benefits stems from the “income” or “asset” rules of SSI and Medicaid. If the software purchase is considered a benefit in kind, or if the funds used for the purchase are deemed to have increased the beneficiary’s income or assets above the allowable limits, it could lead to a reduction or termination of benefits. However, careful planning can mitigate this risk. The trustee can demonstrate that the expenditure was made directly for a qualifying purpose – job search assistance – and not as a source of personal enrichment for the beneficiary. This involves maintaining detailed records of all transactions and being prepared to answer questions from benefits administrators. About 15% of SSI recipients have benefits reduced or terminated due to income or asset violations (Source: Government Accountability Office, 2021 report).
What documentation is crucial for justifying this type of expense?
Thorough documentation is absolutely essential. This includes a clear statement in the trust document authorizing expenses related to employment training and job search assistance. It also includes receipts for the software, records of job applications submitted, and any correspondence with potential employers. Furthermore, the trustee should maintain a log detailing how the software is being used to support the beneficiary’s job search efforts. A simple statement like, “Resume-building software purchased to assist beneficiary with creating a professional resume and cover letter for job applications,” can be incredibly helpful. The trustee should be prepared to provide this documentation to benefits administrators upon request. It’s like building a case – you need evidence to support your claim.
I remember a client, Mrs. Davison, whose son, Mark, had cerebral palsy. She diligently managed his SNT, but she made a critical error when Mark expressed interest in taking an online coding course.
She purchased the course without first consulting with an attorney or fully understanding how it might affect Mark’s benefits. A few months later, she received a notice from Social Security that Mark’s SSI benefits were being reduced because the course was deemed to provide “unearned income.” She was devastated and felt like she had let Mark down. She was so proud of his ambition, and now she feared he wouldn’t be able to pursue his dreams. She immediately sought legal counsel and, after a lengthy appeals process, was able to restore Mark’s benefits, but it was a stressful and costly experience. The lesson was clear: always seek expert advice before making significant expenditures from an SNT.
Fortunately, we were able to help another client, Mr. Chen, whose daughter, Lily, had Down syndrome. Lily was eager to find a part-time job, but her resume was outdated and lacked the polish needed to impress potential employers.
Mr. Chen consulted with us before purchasing a resume-building software subscription. We reviewed the trust document and confirmed that expenses related to employment training were authorized. We then helped him document Lily’s job search efforts and how the software was being used to create a professional resume and cover letter. Within a few weeks, Lily landed a part-time job at a local bookstore. It was a huge accomplishment for her, and it wouldn’t have been possible without the support of the SNT and careful planning. It was a reminder that with the right guidance, special needs trusts can truly empower beneficiaries to live fulfilling and independent lives.
What ongoing considerations should a trustee keep in mind?
Ongoing diligence is crucial. The trustee should regularly review the trust document and relevant regulations to ensure continued compliance. They should also maintain open communication with benefits administrators and be prepared to answer any questions that may arise. It’s not enough to simply make a one-time purchase; you need to demonstrate ongoing compliance with the trust’s terms and applicable regulations. Remember, the goal is to enhance the beneficiary’s quality of life without jeopardizing their essential benefits.
What are the potential pitfalls to avoid when using SNT funds?
The biggest pitfalls often stem from a lack of understanding of the rules and regulations governing SNTs. Trustees should avoid making impulsive purchases or relying on informal advice. They should also be wary of “sales pitches” that promise easy solutions without fully explaining the potential consequences. It’s always better to err on the side of caution and seek expert guidance before making any significant expenditures. A little bit of planning can go a long way in protecting the beneficiary’s benefits and ensuring their long-term financial security.
About Steven F. Bliss Esq. at San Diego Probate Law:
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