The question of whether a special needs trust (SNT) can pay for storage units for medical equipment is a common one, particularly in San Diego where the cost of living – and storage – can be substantial. The short answer is generally yes, *but* with significant stipulations and careful consideration of the trust’s terms, the beneficiary’s overall needs, and compliance with Supplemental Security Income (SSI) and Medi-Cal regulations. Ted Cook, as a trust attorney specializing in SNTs, frequently guides clients through these complexities, emphasizing that proper planning is paramount to avoid jeopardizing essential benefits. Roughly 20% of families establishing SNTs specifically inquire about covering expenses beyond direct medical care, highlighting the need for clear guidance.
What are the SSI and Medi-Cal implications?
Supplemental Security Income (SSI) and Medi-Cal are needs-based programs. This means eligibility depends on limited income and assets. If a beneficiary of an SNT receives income or assets directly, it could disqualify them from these vital benefits. However, a properly structured SNT allows the beneficiary to receive distributions for their benefit *without* counting towards those asset limits. Payments for medical equipment storage fall into a gray area; it’s not direct income, but it *is* an expense that reduces the funds available for other eligible needs. Ted Cook always stresses that any distribution must demonstrably benefit the beneficiary and not simply be a convenience or a way to accumulate wealth.
How does the trust document influence allowable expenses?
The trust document is the governing instrument. It explicitly defines what expenses the trustee is authorized to pay. A well-drafted SNT will include broad language covering “health, education, maintenance, and support” and specifically address the possibility of covering expenses related to durable medical equipment. However, even with broad language, the trustee has a fiduciary duty to act prudently and in the beneficiary’s best interest. If the storage unit costs are excessive relative to the value of the equipment or the beneficiary’s overall needs, a court might question the trustee’s judgment. “It’s not enough to simply say you *can* pay for something; you must demonstrate it’s a *reasonable* and *necessary* expense,” Ted Cook often advises.
Is storing medical equipment considered a “necessary” expense?
Determining whether storage is “necessary” hinges on the circumstances. If the medical equipment is essential for the beneficiary’s health and well-being, but the beneficiary lacks adequate space to store it at home, a storage unit could be deemed necessary. For example, a power wheelchair, hospital bed, or specialized therapy equipment might require storage if the beneficiary lives in a small apartment or shared living arrangement. However, if the equipment is rarely used or could be reasonably accommodated elsewhere, the trustee might face scrutiny for approving the expense. A recent study found that approximately 15% of SNT beneficiaries require storage solutions for durable medical equipment, underscoring the growing need for this type of support.
What happens if the trust improperly pays for storage?
I remember Mrs. Gable, a lovely woman whose son, David, had cerebral palsy. She established an SNT for David, intending to provide him with a comfortable life. Unaware of the specific regulations, Mrs. Gable authorized payments for a large storage unit to house David’s outdated but sentimentally valuable collection of model trains, alongside his necessary medical equipment. David still qualified for SSI, so she didn’t see the problem. However, a routine review of the trust revealed the disproportionate expense. The agency determined that the majority of the storage cost wasn’t directly related to medical care and resulted in a temporary suspension of David’s benefits. It was a stressful time for Mrs. Gable, requiring her to amend the trust and demonstrate that the storage was primarily for essential equipment, a costly and frustrating process.
Can the trustee be held liable for improper distributions?
Absolutely. Trustees have a fiduciary duty to manage trust assets responsibly. If they make improper distributions – meaning those not authorized by the trust document or contrary to SSI/Medi-Cal regulations – they can be held personally liable. This could involve having to reimburse the trust for the improperly distributed funds, plus potential penalties and legal fees. It’s a significant risk that underscores the importance of seeking experienced legal counsel before making any distributions. Ted Cook often reminds clients, “It’s far better to ask questions upfront than to face legal repercussions down the road.”
How can a trustee ensure compliance when paying for storage?
The key is thorough documentation and a clear rationale for the expense. The trustee should maintain records demonstrating that the storage unit is used primarily for essential medical equipment, the equipment is necessary for the beneficiary’s health, and the cost is reasonable given the available alternatives. A written statement from the beneficiary’s physician supporting the need for storage can be invaluable. It’s also prudent to consult with an elder law attorney or trust administrator familiar with SNT regulations. Ted Cook advocates for a proactive approach, advising trustees to obtain pre-approval for any unusual expenses from a qualified professional.
What if the beneficiary can’t afford storage, but needs it for medical reasons?
Fortunately, there are solutions. The SNT can cover the cost of storage, as previously discussed, provided it meets the necessary criteria. Additionally, some local organizations offer assistance with storage for individuals with disabilities. I recall working with a young man named Alex, who required a ventilator and a specialized hospital bed, but lived in a cramped apartment with his mother. The initial cost of the storage unit was steep. Fortunately, after consulting with Ted Cook, we were able to utilize funds from Alex’s SNT to cover the expense. In addition, Ted identified a local nonprofit organization that offered discounted storage rates to individuals with medical needs. This combined approach allowed Alex to receive the necessary care without jeopardizing his benefits, proving that with careful planning, even challenging situations can be resolved.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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