The question of whether a special needs trust (SNT) can pay for storage units for medical equipment is a common one, and the answer is generally yes, but with important considerations. Special Needs Trusts are designed to supplement, not replace, government benefits like Medi-Cal and Supplemental Security Income (SSI). These trusts allow individuals with disabilities to maintain a reasonable quality of life without jeopardizing their eligibility for these crucial programs. The key lies in ensuring that the expenses – including storage unit costs – are directly related to the beneficiary’s disability and do not violate the rules governing these benefits. Approximately 65 million Americans live with a disability, and SNTs are increasingly vital tools for ensuring their financial security and well-being, especially given the rising costs of specialized medical equipment and long-term care.
What expenses *can* a Special Needs Trust cover?
A Special Needs Trust can generally cover expenses that enhance the beneficiary’s quality of life beyond what Medi-Cal or SSI provide. This includes things like specialized therapies, recreation, personal care items, and yes, even storage for durable medical equipment. However, the expense must be directly related to the beneficiary’s disability. For instance, if a beneficiary requires a specialized wheelchair that doesn’t fit inside their home, paying for a climate-controlled storage unit to protect that equipment would likely be permissible. According to the National Disability Rights Network, roughly 26% of individuals with disabilities live below the poverty line, making the supplementary financial support of an SNT incredibly important. It’s also crucial to remember that the trust cannot be used to pay for things that Medi-Cal already covers – that would disqualify the beneficiary from receiving those benefits.
What happens if a trust payment violates benefit rules?
There was a family I worked with, the Harrisons, whose son, Michael, had muscular dystrophy. They had diligently saved funds to create a Special Needs Trust for him, but didn’t fully understand the rules. Michael needed a respiratory machine for nighttime use, but their apartment was small and lacked a dedicated space. They rented a storage unit to keep the machine clean and protected, assuming it would be covered. Unfortunately, they didn’t consult with an estate planning attorney before making the payments. Medi-Cal flagged the storage unit expense as an unapproved use of trust funds, leading to a period of benefit suspension and a lot of stress. The Harrisons were eventually able to resolve the issue, but it involved significant paperwork and legal fees. It highlighted how even seemingly small, well-intentioned decisions can have major consequences if not carefully considered. Approximately 1 in 5 Americans experiences some form of disability, and many are unaware of the complex rules surrounding SNTs.
Can you store equipment long-term in a special needs trust?
The long-term storage of medical equipment is permissible as long as the equipment remains necessary for the beneficiary’s health and well-being. A trust can’t simply be used to accumulate assets; it must be for the benefit of the individual. Regularly reviewing the beneficiary’s needs and ensuring the equipment is still being used is important. A trust document should clearly outline the types of expenses allowed, providing trustees with guidance and reducing the risk of errors. It’s important to understand that the trustee has a fiduciary duty to act in the best interests of the beneficiary and must be able to justify all expenditures made from the trust. According to the Social Security Administration, nearly 10.5 million people receive SSI benefits, and even a small disruption to those benefits can have a significant impact on their lives.
How did a trust help after a difficult situation?
I once worked with a woman named Sarah, whose daughter, Emily, had cerebral palsy. Emily required a variety of adaptive equipment, including a specialized gait trainer and a communication device. When Sarah’s home was unexpectedly damaged in a fire, they had to temporarily relocate to a smaller apartment. They were able to utilize the Special Needs Trust to not only pay for a secure storage unit for Emily’s equipment but also to cover the costs of adapting the temporary housing to meet Emily’s needs. This allowed Emily to continue her therapies and maintain her quality of life despite the challenging circumstances. Sarah was incredibly grateful that the trust had been set up properly, as it provided a safety net during a very difficult time. The peace of mind that came with knowing they had the resources to care for Emily was invaluable. Properly structured trusts can truly make a life-altering difference, providing financial security and ensuring a better future for individuals with disabilities.
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Feel free to ask Attorney Steve Bliss about: “What is the difference between a testamentary trust and a living trust?” Or “Are retirement accounts subject to probate?” or “Can a living trust help me avoid probate? and even: “What are the alternatives to filing for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.