The question of whether a special needs trust (SNT) can fund self-employment or gig economy expenses is complex, demanding a careful balance between enabling independence and preserving crucial needs-based benefits like Supplemental Security Income (SSI) and Medi-Cal. Generally, SNTs *can* fund these activities, but stringent rules apply to ensure compliance with these government programs. The key lies in understanding that SNT funds used for self-employment must not be considered “income” to the beneficiary for SSI and Medi-Cal eligibility purposes. This requires meticulous record-keeping and a structured approach, often involving a “plan” approved by the Social Security Administration (SSA) or a qualified attorney like Steve Bliss. Failure to adhere to these rules can result in benefit disqualification, potentially leaving the beneficiary without essential support. It is estimated that over 65 million Americans – roughly 26% of the adult population – have some type of disability, making these issues incredibly relevant for a significant portion of the population.
What are the income limitations for SSI and how can a SNT help?
Supplemental Security Income (SSI) is a needs-based program, meaning eligibility hinges on both income and resources. In 2024, the maximum monthly SSI payment is $943, but this is significantly reduced as the beneficiary’s unearned income increases. Even a small amount of unearned income can dramatically lower the SSI benefit. A special needs trust becomes crucial because it allows the beneficiary to own assets *without* those assets being counted towards their resource limits for SSI and Medi-Cal eligibility. However, income *generated* from those assets (like profits from self-employment) needs careful handling. The SSA allows for “pass-through” income where earnings are used for the beneficiary’s needs and are not counted towards the income limit. “This isn’t simply about funding a hobby, it’s about enabling a pathway to purpose and potentially, a degree of financial independence,” Steve Bliss often advises clients. It’s a tightrope walk, but a navigable one with the right guidance.
How do SNTs cover business expenses without impacting benefits?
Funding self-employment through an SNT necessitates a clear distinction between legitimate business expenses and personal income. The trust can cover expenses like equipment, software, marketing materials, and even workspace rental – *provided* these are genuinely related to a bona fide business endeavor. The key is documentation. Every expense must be meticulously recorded with receipts and invoices, demonstrating a clear business purpose. The SSA will scrutinize these records to ensure they aren’t disguised personal spending. “Think of it like running a small business – you need a business plan, you need accounting, and you need to be able to prove to an auditor that everything is legitimate,” Steve Bliss explains. For example, if the beneficiary is a talented photographer offering services online, the trust could cover the cost of a professional camera, editing software, and a website domain – but not a vacation to Hawaii. The trust cannot provide a ‘salary’, however, it can pay for legitimate business expenses.
I knew a man named Arthur who thought he could skirt the rules…
Arthur, a retired carpenter with a passion for woodworking, established a small online shop selling handcrafted birdhouses. He believed he could simply funnel money from his SNT directly into his business without accounting for anything. Initially, it seemed to work. He was enjoying his hobby and making a little extra money. But within six months, his SSI benefits were reduced dramatically. The SSA determined that the funds were being used to generate income, treating it as unearned income and reducing his benefits accordingly. He hadn’t bothered with a formal business plan, hadn’t kept detailed records, and hadn’t consulted with an attorney. Arthur quickly realized his mistake, faced significant financial hardship, and was forced to scale back his operation and rely heavily on family support. His story became a cautionary tale for many of Steve Bliss’s clients, highlighting the importance of proactive planning.
But Sarah’s story shows how it *can* work…
Sarah, a gifted graphic designer with cerebral palsy, dreamed of running her own freelance design business. Working with Steve Bliss, her family established a detailed business plan outlining her services, marketing strategy, and projected expenses. The SNT was used to purchase a professional computer, design software, and cover website hosting costs. Every expense was meticulously documented and submitted to the SSA for review. The SSA approved the plan, recognizing that the SNT funds were being used to establish a legitimate business and not to provide personal income. As a result, Sarah was able to build a successful freelance career, earn a modest income, and maintain her crucial SSI and Medi-Cal benefits. “Sarah’s success is a testament to the power of careful planning and the importance of navigating the complexities of SNTs with expert guidance,” Steve Bliss often shares. She proved that, with the right structure, self-employment can be a viable path to independence for individuals with special needs.
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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.
My skills are as follows:
● 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.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
banckruptcy attorney
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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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: “How do I choose someone to make decisions for me if I’m incapacitated?” Or “Can a handwritten will go through probate?” or “What should I do with my original trust documents? and even: “Can I transfer assets before filing for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.