A special needs trust (SNT) is an excellent planning instrument that allows funds to be held in trust for a person with a disability (the beneficiary) and preserves that person’s eligibility for public assistance programs such as Supplemental Security Income (SSI) and Medicaid. Creating these trusts requires careful attention to detail in construction and compliance with both federal and state rules and regulations.
Once a SNT is created and funded, the management of the assets in the trust and how those assets are spent for the benefit of the person with a disability also require strict attention by the trustee (the manager of the trust) to insure compliance with government regulation. Vehicles, whether for personal use of the person with a disability or an accessible vehicle to transport a person with a disability, require the Trustee to examine all options to ascertain what is best to meet the beneficiary’s needs. Below are some of the challenges a trustee may encounter in deciding the best options for use of a vehicle.
- A suitable vehicle. A beneficiary who can drive may request a vehicle that is not suitable or appropriate. The trustee should only consider vehicles that provide reliable, dependable and safe transportation. Family trustees sometimes will purchase their “dream” vehicle rather than a vehicle that best meets the needs of the beneficiary. An accessible vehicle for a beneficiary who does not drive may require a consultation with an occupational therapist to determine the physical needs of the beneficiary and which type of vehicle and/or lift system will best meet those needs.
- Consider cost of repairs and accessibility issues. Modifications of vehicles to allow a beneficiary to drive or to install lifts and ramps frequently require expensive repairs. Some lifts require the beneficiary to move unnaturally to enter and exit a vehicle and may be difficult for caregivers to operate. Gathering information on all product options is important as well as checking with other trustees to share their experiences.
- Expense. The trustee should create a budget before purchasing a vehicle which would include the cost of the vehicle, insurance, repairs, maintenance, fuel and licensing. The trust must have sufficient assets to support the expense of a vehicle. If the vehicle is also used for general family purposes, the trustee may set-up a system to require the family pay a portion of the vehicle expenses. One option is to compare the expense of purchasing a vehicle versus leasing.
- Potential liability issues. Appropriate insurance coverage should be purchased including sufficient liability coverage to protect the trust’s assets.
- Holding title to the vehicle. For a beneficiary who is able to drive, title to the vehicle is usually held in the name of the beneficiary. For an accessible vehicle, title is usually held in the name of the parent or driver. In some cases depending on the type of SNT, this may require a court order to clarify that this arrangement is not considered a gift. In all situations, the trust should be listed as a lienholder on the title and the original vehicle title should be retained by the trustee.
The challenges discussed above are some of the more common issues that arise with the use of a vehicle by a beneficiary. Consulting with a knowledgeable professional is always advised.
Barry M. Meyers
Steven D. Avery
Elder Law Offices of Meyers & Avery