Ohio Social Security Disability And SSI Legal Blog

What is a special needs trust?

Receiving Supplemental Security Income (SSSI) can be complicated, depending on the circumstances surrounding the payouts. Generally speaking, if an individual has a trust in his or her name, the trust will count as a resource against SSI. This means that for every dollar in the trust you will lose a dollar in SSI.

However, there are some important exceptions to this rule. One of the exceptions refers to a special needs trust. According to the Social Security Administration, special needs trusts are set up in the name of individuals who have special needs in order to provide for them.

How does this work?

There is a very delicate balance between using funds from a special needs trust and using funds from SSI. Again, in the majority of situations, $1 from a trust will result in $1 removed from SSI benefits. Essentially, it is paramount that the trust never gives the beneficiary either cash or the equivalent to pay for necessities like food and shelter directly.

This is because, again, every dollar that a beneficiary receives from a trust or anywhere else is going to result in a deduction from SSI. Instead, the trust should pay the money directly to either a landlord or a store. In this way, there will still be a deduction from SSI, but there is a limit: there will only be a one-third reduction in overall benefits as compared to a dollar-for-dollar exchange.

What else can a special needs trust cover?

Beyond absolute necessities, a beneficiary can use a special needs trust can for a variety of other things. However, due to the high likelihood of this tampering with overall SSI benefits, it is important to speak with a professional before spending any money out of a special needs trust.