When we first heard about Special Needs Trusts, we thought: There it is. The very thing we need. How good of the government to create this financial instrument for us! We can put money into this trust fund, and after we die it can be administered by either Alex’s sister or a non-profit organization, and from that fund Alex can buy the bulk of what he needs. He’ll also have Supplemental Security Income (SSI) from the Federal government, and Medicaid, to fill in the gaps. At last, the path is clear!
There are very strict rules overseeing how the money in a Special Needs Trust can be spent. The beneficiary can buy furniture with it, and medical expenses not covered by Medicaid, and odd expenses like haircuts and supplies for whatever hobby the beneficiary might have. Those who are pro-Special Needs Trusts will often fall into the role of a game show host informing a contestant that he has won fabulous prizes: The money in a trust can be used for vacations! Summer camp! All manner of recreation and entertainment!
Sounds great. However, the money in a Special Needs Trust cannot be used for any of the following:
The government absolutely insists that if a disabled adult receives SSI payments, that this money — and only this money — be used to purchase the basic necessities of life.
Well, okay, let’s play by the government’s rules for a while. How much would Alex get in SSI benefits?
My wife has done the research on this and has come up with a figure of about $700 a month — most of that from the Federal government, and $200 more from the state. It might wind up being a little higher, but probably not significantly so. That pool of money is supposed to pay for… well, everything short of haircuts and toy trains.
In addition, Alex will probably find himself on food stamps, to the tune of about $200 a month. How this is supposed to work is anybody’s guess. As former foster parents, my wife and I have had many dealings with the food-distribution bureaucracy — not the food stamp program itself, but a related program called WIC (Woman, Infants, and Children). Oh my goodness. The rules! The millions of ridiculous, picayune rules! Some of them have a slight whiff of sense — I can understand how some committee somewhere came to the conclusion that WIC recipients shouldn’t be allowed to blow the whole check on Cheetos. But most of the rules feel like they were generated at random by a malevolent computer. We weren’t allowed to buy formula in large cans; only in (more expensive) smaller cans. We were allowed to by 36 ounces of Kix, but only in the form of three 12 oz. boxes, not two 18 oz. boxes. And so on. We have not yet done the research on the food-stamp program here in Connecticut, but we have every expectation that it will be just as rules-laden and Byzantine. Do we want to force Alex into this ever-changing labyrinth? Take a guess.
So the question now becomes: Can we set Alex up in such a way that he can bypass all of this? Just skip over SSI and food stamps and go it alone? How much money would that take? And — by the way; we kinda glossed over this bit back in the first paragraph — who would administrate that money? We’re not about to just hand a lump sum over to Alex and tell him to have fun.
These are some of the many questions we’ll be looking at going forward.