What is the money in a special needs trust used for?
A special needs trust, or a supplemental needs trust, is used to provide for a person who is disabled. There are restrictions about what the money can be used for, because if the disabled person is provided with cash or cash equivalents, this could result in a loss of eligibility for means-tested benefits like Supplemental Security Income (SSI) and Medicaid. The money cannot be used to pay rent, for example, as this would be considered the equivalent of providing cash.
Usually, the money is used to buy things that government benefits alone do not provide for the person who is disabled. For example, the money could be used to buy clothing, toys, electronics, or experiences like special trips. The goal is for the assets in the trust to be used to enhance quality of life of the person with the disability.