A special needs trust can provide a trustee with a great amount of flexibility to spend money on a disabled beneficiary without risking their eligibility for certain federal benefits. “If a trust beneficiary is receiving means-tested government benefits, particularly Supplemental Security Income (SSI), Medicaid, or a Section 8 housing voucher, any cash provided by the trust directly to the trust beneficiary will count as unearned income and could either reduce or eliminate the beneficiary’s access to these vital government programs.” Another reason why a trustee might want to be careful about giving a beneficiary lots of money might be because the beneficiary could difficulty handling money. A good trustee should assess the beneficiaries needs and living situation when deciding how to give them money. This article discusses trustees using a prepaid credit card to distribute resources to beneficiaries as an option.
See Eric Prichard, Special Needs Trusts and Credit Cards: Risks and Rewards, Resourceful Law, January 6, 2015.
