Everyone is familiar with the high cost of travel and the difficulties of staying in touch with distant family. But families of people with special needs often face high travel expenses from medical emergencies, unforeseen circumstances or constant care taking.
Whether these expenses can be reimbursed and how depends on the type of special needs trust. If the trust was created as a third-party trust, meaning that it is funded with money from someone other than the trust beneficiary,then family members can typically be reimbursed for these expenses if allowed under the trust. Stricter rules apply, however, where the trust is set up as a first-party trust, meaning that is funded by the beneficiary’s own money.
Distributions from first-party trusts are subject to the “sole benefit” rule, which is meant to ensure that trust distributions are used solely for the benefit of the trust beneficiary. Prior to 2012, no distinction existed for family members’ travel expenses between first- and third-party trusts – travel to visit the beneficiary was allowed. But that August, the Social Security Administration (SSA) revised its Program Operations Manual System (POMS), the guidebook that agency employees follow when determining a person’s Supplemental Security Income eligibility, in a way that appeared to interpret the “sole benefit” rule for first-party trusts to bar reimbursement of family members’ travel expenses.
Following an outcry by disability advocates, the SSA rescinded the change and implemented a compromise in May 2013. Although the compromise retained the general prohibition on reimbursement of travel expenses from first-party trusts, it created two, relatively broad, exceptions.The first exception apples to medical treatment. Specifically, the POMS states that trust distributions are allowed for the “payment of third party travel expenses which are necessary in order for the trust beneficiary to obtain medical treatment.”Second, first-party trusts can reimburse travel expenses where the trust beneficiary who lives in an institution, nursing home, or other long-term care facility or supported living arrangement, and if the travel is “for the purposes of ensuring the safety and/or medical well-being of the individual.”
To find out more about whether your trust can reimburse family members’ for travel expenses, determine the type of trust you have and investigate how the above rules apply. For more information on how your trust works, you are welcome to contact our office and make an appointment to speak with the attorney who can review the specifics of your circumstances.
Note: It is expected that the SSA will soon issue new directives broadening the allowable distributions for such expenses. We will update our readers if and when this occurs.