[This article was originally printed in the Straight Word, a publication of the Burlington County Bar Association.]
by Thomas D. Begley, Jr., CELA
Individuals with disabilities are often able to travel and take vacations. A special needs trust can pay for vacations, but there are different rules that apply to third-party special needs trusts as opposed to first-party special needs trusts with respect to these payments. First-party special needs trusts must adhere to the “sole benefit of” rule with respect to distributions for a trust beneficiary. This means that, generally, distributions can only be made for the benefit of the beneficiary. If others receive an incidental benefit, they must pay their pro rata share. The “sole benefit of” rule does not apply to third-party special needs trusts, so administration of these trusts is much easier.
An issue often arises as to whether the payment for a hotel room and food on a vacation, or for a state room and food on a cruise, constitutes payment for food and shelter and would be considered in-kind support and maintenance (ISM), which would reduce the trust beneficiary’s SSI payment.
Under the POMS, ISM the individual receives during a temporary absence is not counted. However, it should be noted that during a temporary absence SSA continues to value ISM as if an individual were physically in his or her permanent living arrangement. So, if the trust were paying a person with a disability’s rent in an apartment, the rent would be considered ISM while the individual was temporarily absent, but the payment for the food and shelter on the cruise would not be considered ISM.
Payment of Travel Costs
One way for a trust to pay incidental vacation expenses is for the trust to pay the provider directly. This works very well where the resort is an all-inclusive arrangement. The other way to pay for incidental expenses is to have a co-traveler pay these expenditures and reimburse them from the trust.
There are a number of issues that arise with respect to trust payments for vacations for the disabled beneficiary.
Other Family Members
It is often difficult, if not impossible, for an individual with disabilities to travel alone. The issue arises as to whether the trust can pay for other family members to join the beneficiary on the vacation. The Social Security Administration (SSA) has taken the position, with respect to self-settled trusts, that the trust can only pay for a skilled health care–trained professional if a travel companion for the beneficiary is necessary. If the trust is a third-party trust, the “sole benefit of” rule does not apply and payment for other family members can more easily be justified regardless of whether they are a “skilled healthcare-trained professional.” Very often, the person with disabilities does not need a skilled health-care trained professional. He simply needs someone to push his wheelchair or perform other non-professional tasks.
If a second travel companion is to be paid for by the self-settled trust, SSA has indicated informally that a letter from the beneficiary’s doctor that the travel companion is necessary may be required.
Another issue that might arise with respect to the distributions for vacation from a first-party special needs trust is whether the vacation is appropriate for the beneficiary’s special needs.
The trustee must determine whether the vacation is too expensive. Ideally, the assets in the special needs trust will last for the beneficiary’s lifetime. If funds are expended too rapidly for vacations or any other purposes, the funds may be exhausted prematurely. Factors to be considered in determining whether the expenses of a vacation are appropriate would be whether the beneficiary requires first-class air travel because of a need to spread out and proximity to restrooms. Handicap vans are often expensive, but may be an absolute necessity. Expenses can be controlled by avoiding expensive hotels and restaurants.
The trustee should require receipts for all purchases. If possible, credit cards might be considered.
The value of a ticket for domestic travel received by an individual (or spouse) is not a resource if the ticket is:
- Received as a gift;
- Not converted to cash; and
- Excluded from income per SI 00830.521.
The value of tickets for non-domestic travel received by an individual are a resource, unless the ticket cannot be sold or converted to cash due to restrictions placed on the ticket. For example, this means the ticket must be non-refundable.
In some cases, an individual with disabilities is able to take a vacation but they require non-family supervision. There are companies that offer vacations for individuals with developmental disabilities and other special needs. Many of these vacations are supervised tours. Some companies will even design custom travel packages for group travel for organizations or other affinity groups. These tour companies attempt to offer vacations ensuring a safe environment with emphasis on inclusion. The trips promote integration, socialization, friendship and fun for the travelers with disabilities. Many special needs tours are all inclusive, so that the special needs trust simply pays the tour operator and the distributions are not included as income to the beneficiary of the special needs trust.
Generally, the groups tend to be small so that there is a good ratio between chaperones and special needs travelers. The travel escorts usually consist of social workers, teachers, group home and day program counselors, and other caring individuals. The staff is trained to work with individuals with developmental disabilities and special needs travelers. One such organization offering these tours is:
P.O. Box 970220
Coconut Creek, FL 33097
Phone: (866) 748-8747
Web site: www.exceptional-vacations.com
 POMS SI 00835.040 2.
 Medicaid Trust Exceptions & Supplemental Security Income (SSI), Mandy Stokes, SSI Policy Expert, Philadelphia Regional Office, Social Security Administration, 2013 Trustee School, Begley Law Group, Philadelphia, Pennsylvania, October 25, 2013.
 SI 01120.150.A.