Navigating the complexities of funding specialized care for a loved one with special needs requires careful planning and understanding of the rules governing special needs trusts. Many families seek innovative therapies, sometimes even exploring options abroad, to enhance the quality of life for their family members. The ability to use a special needs trust (SNT) to fund these programs, particularly immersive therapies abroad, hinges on several key considerations, primarily the trust’s language, the beneficiary’s needs, and adherence to Supplemental Security Income (SSI) and Medi-Cal (California’s Medicaid) rules. Approximately 1 in 5 American families have a family member with a disability, making this a frequently asked question for estate planning attorneys.
What Expenses Can a Special Needs Trust Typically Cover?
A properly drafted special needs trust is designed to supplement, not supplant, government benefits. This means the trust can pay for goods and services that enhance the beneficiary’s life *without* jeopardizing their eligibility for critical programs like SSI and Medi-Cal. Commonly covered expenses include supplemental medical care (beyond what Medi-Cal covers), therapies (physical, occupational, speech), recreational activities, education, and personal care items. However, simply *wanting* to fund a particular expense isn’t enough; it must meet the criteria of being in the beneficiary’s best interest and not affecting their benefits. The average cost of specialized therapies can range from $100 to $500+ per hour, highlighting the need for careful financial planning within the trust.
Is Immersive Therapy Abroad a Permissible Expense?
Funding immersive therapy programs abroad presents a more complex scenario. While not automatically prohibited, it requires careful scrutiny. The key is to demonstrate that the program is medically necessary and provides benefits *not readily available* domestically. Documentation from a qualified medical professional is crucial, outlining the program’s objectives, the beneficiary’s specific needs, and how the program will improve their overall health and well-being. Furthermore, the trust document should ideally allow for such expenses, or at least not explicitly prohibit them. If the program is deemed solely recreational or educational without a clear medical component, it may be considered a disqualifying expense. Many families also face logistical challenges, such as travel costs, accommodation, and ensuring appropriate medical supervision during the program.
How Does This Affect SSI and Medi-Cal Eligibility?
SSI and Medi-Cal have strict income and resource limits. Assets held directly by the beneficiary disqualify them from receiving benefits. A special needs trust avoids this by legally separating the beneficiary from ownership of the trust assets. However, distributions from the trust can still impact eligibility if they are considered “unearned income.” Distributions for “qualified medical expenses” are typically excluded from income calculations. This is where the medical necessity documentation for the immersive therapy program becomes vital. The trustee must be able to demonstrate to the Social Security Administration and Medi-Cal that the funds are being used for legitimate medical care, and therefore do not count towards the beneficiary’s income limit. Approximately 13.5% of people in California are on Medi-Cal, therefore it is important to adhere to the rules and regulations.
A Story of Planning and Peace of Mind
I remember working with a family, the Andersons, whose son, Ethan, had cerebral palsy. They discovered a groundbreaking, immersive therapy program in Germany specifically designed for children with Ethan’s condition. They were hesitant to pursue it, fearing it would jeopardize Ethan’s SSI benefits. We meticulously reviewed their existing special needs trust, ensuring it contained broad language allowing for medical care and therapies, regardless of location. We worked with Ethan’s physician to obtain detailed documentation outlining the program’s medical necessity and potential benefits. After a careful review, we determined that the trust could fund the program without impacting Ethan’s benefits. The Andersons were overjoyed, and Ethan thrived during the program, achieving significant improvements in his motor skills and independence. This story shows how important it is to plan ahead with an expert estate attorney.
However, I also recall a situation where a family, the Millers, attempted to fund a similar program abroad without proper planning. They assumed their trust would automatically cover any expense they deemed beneficial. Unfortunately, their trust document was narrowly drafted and lacked the necessary language to authorize out-of-state or international medical expenses. Furthermore, they hadn’t obtained prior approval from the Social Security Administration or Medi-Cal. As a result, the program was deemed ineligible for trust funding, and the family was forced to abandon their plans, leaving them frustrated and disappointed. This highlights the importance of proactive planning and seeking expert legal guidance.
Remember, California is a community property state, meaning all assets acquired during marriage are owned equally by both spouses. The surviving spouse benefits from a “double step-up” in basis for inherited assets, potentially significantly reducing capital gains taxes. Formal probate is required for estates exceeding $184,500, with executor and attorney fees often ranging from 4% to 8% of the estate’s value. A well-drafted will or trust can help avoid these costly probate procedures. Additionally, trustees must adhere to the California Prudent Investor Act when managing trust investments. No-contest clauses are narrowly enforced, only applying if a beneficiary challenges the will or trust without probable cause.
43920 Margarita Rd ste f, Temecula, CA 92592Steven F. Bliss ESQ. has a phone number: (951) 223-7000.
Don’t leave the future of your loved one to chance. A carefully crafted special needs trust, combined with proactive planning and expert legal guidance, can open doors to innovative therapies and ensure a brighter, more fulfilling life. Contact Steven F. Bliss ESQ. today for a consultation and let us help you navigate the complexities of special needs planning with confidence!