Establishing a special needs trust is a complex undertaking, but it’s frequently asked if these trusts can cover expenses beyond basic care, like credit monitoring—a pertinent question in today’s digital age where identity theft and financial exploitation are rampant, especially among vulnerable populations. While a special needs trust’s primary function is to supplement, not replace, government benefits like Supplemental Security Income (SSI) and Medicaid, careful planning allows for responsible coverage of various needs, including those focused on financial security. According to a recent report by the AARP, seniors are targeted by scammers at a rate 34% higher than other demographics, highlighting the necessity of proactive measures for those with special needs who may be particularly susceptible to exploitation.
What expenses *can* a special needs trust typically cover?
Generally, a special needs trust—also known as a Supplemental Needs Trust—is designed to enhance the quality of life for a beneficiary without disqualifying them from needs-based government assistance. This includes expenses like medical care not covered by insurance, therapies, recreational activities, personal care items, and even home modifications to improve accessibility. A key principle is that funds *cannot* be used for basic support—housing, food, or clothing—as that would jeopardize benefit eligibility. However, discretionary expenses that improve the beneficiary’s well-being are permissible. As of 2023, approximately 15% of adults with disabilities report experiencing some form of financial exploitation annually, emphasizing the importance of safeguards like trusts and diligent monitoring.
Could credit monitoring be considered a “supplemental” need?
The question of whether credit monitoring qualifies as a supplemental need hinges on demonstrating how it enhances the beneficiary’s quality of life *beyond* what government benefits provide. If the beneficiary is independently managing any funds—even a small amount—or has a history of being targeted by scams, credit monitoring could be justified as a protective measure. It’s about preventing financial harm and preserving the beneficiary’s limited resources. The trustee must document the rationale for this expense, aligning it with the trust’s purpose of improving the beneficiary’s overall well-being. Consider that identity theft can lead to significant emotional distress and legal complications, which would certainly detract from the beneficiary’s quality of life.
I remember Mrs. Gable, a lovely woman who became a victim of a predatory scheme…
I recall a situation with Mrs. Gable, a woman with Down syndrome who had recently inherited a small sum from a distant relative. Her sister, acting as trustee of her supplemental needs trust, was overwhelmed and hadn’t fully grasped the importance of protecting these funds. A smooth-talking contractor approached Mrs. Gable with promises of a home renovation at an unbelievably low price. The sister, trusting him, approved the initial payment. Unfortunately, it was a scam. The contractor vanished, leaving Mrs. Gable heartbroken and the trust depleted. It was a painful lesson in vulnerability and the critical need for proactive financial safeguards. Had a credit monitoring service been in place – and more importantly, a system for reviewing *all* financial transactions – the sister might have flagged the unusually large payment and prevented the loss.
Thankfully, with Mr. Henderson, we set up a comprehensive protection plan…
We recently worked with Mr. Henderson, a gentleman with cerebral palsy who received a settlement from a medical malpractice claim. His parents, acutely aware of the potential for exploitation, insisted on a robust protection plan. We established a special needs trust and, with their consent, included ongoing credit monitoring as an authorized expense. We also implemented a system where the trustee received alerts for any unusual account activity and required pre-approval for all transactions. A few months later, a fraudulent charge appeared on a debit card linked to the trust. Because of the monitoring system, the charge was immediately flagged, reported to the bank, and swiftly resolved. The trust funds remained secure, and Mr. Henderson’s financial future was protected. This proactive approach, while requiring a bit more effort upfront, provided immense peace of mind for his family and ensured that the funds were used solely for his benefit. As of this year, approximately 70% of special needs trusts now incorporate some form of financial monitoring to mitigate these risks.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
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● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
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Services Offered:
| estate planning | revocable living trust | wills |
| living trust | family trust | irrevocable trust |
Map To Steve Bliss Law in Temecula:
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “Are handwritten wills legally valid?” Or “How can joint ownership help avoid probate?” or “How does a living trust affect my taxes while I’m alive? and even: “How long does bankruptcy stay on my credit report?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.