Using a Credit Card When You Have a Special Needs Trust

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Entrusted Legacy Law

For more information about the author, click to view their website: Sharek Law LLC

Posted on

Jun 19, 2023

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Pennsylvania - Greater Pittsburgh Area

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A special needs trust (SNT) allows you to meet your needs while receiving government benefits, such as Medicaid and Supplemental Security Income (SSI). When you have a special needs trust, you can use it to pay for goods and services government benefits do not cover, such as therapy, education, housing, and travel.

Since receiving income directly from your trust would jeopardize your eligibility for benefits, your trustee cannot give you cash from your SNT. When you use a credit card for permitted transactions, and your trustee pays off the balance with funds from your trust, these payments to a credit card company are not considered income. An SSI or Medicaid recipient who is capable of managing their own affairs can therefore use a credit card to make small purchases, and the trustee of the special needs trust need not micromanage every transaction.

In the past, beneficiaries of SNTs sent their bills to their trustees for payment. Today, an individual with an SNT who qualifies for a personal credit card may find that using a credit card is more convenient.

Credit cards have several benefits. Using a credit card to manage payments from your special needs trust allows you to maintain independence, gain access to some of the advantages of a credit card, and easily keep records while preserving your eligibility for Medicaid and SSI.

Although credit cards can help people manage their special needs trusts, there are also several important restrictions and considerations to keep in mind. Consult with a special needs planner to ensure all transactions are acceptable under the trust's rules and comply with government regulations.


The Benefits of Using Credit Cards When You Have a Special Needs Trust

If you have a special needs trust, using a credit card has many benefits, including:

  • Independence: Allowing you to maintain your independence. You can use your card to make qualifying purchases yourself. Your trustee does not have to make the transactions for you.

  • Access to the Typical Advantages of a Credit Card: Depending on your eligibility to obtain a credit card, it can be in your name. Using it responsibly can help you establish or build your credit history, which may be important for your future financial needs.

  • Record-Keeping: Credit cards provide easy record-keeping and a convenient way to monitor transactions from your special needs trust, which can also help special needs trustees fulfill their duty to maintain records. When you use your card, your trustee can observe your purchases and ensure that all expenses are allowable under the trust’s rules. Your statements can help your trustee keep track of funds leaving the trust.

  • Benefits Eligibility: While adhering to Medicare and SSI’s income and asset limits, you can access funds from your SNT. Credit cards can help prevent your trustee from accidentally providing you with cash payments that could affect your eligibility for government benefits.

Considerations When Using a Credit Card for Your Special Needs Trust

While you can use a credit card to access funds from your special needs trust for certain transactions, restrictions apply. If your trustee sees a charge on your card that could affect your benefits eligibility, they can flag it for review.

  • You cannot use your credit card to pay for food and shelter, which SSI would cover.

  • When administering your funds, your trustee must ensure that any expenditures are for your sole benefit if you have a first-party special needs trust.

  • While using a credit card is appropriate, you should not use a debit card. Debit cards are considered cash income.

Best Practices

When using a credit card for a special needs trust fund, remember several best practices.

  • Choose a card with low fees and interest rates.

  • Set a clear budget and monitor transactions regularly.

  • Keep thorough records and receipts of expenses.

  • Consult with your special needs planning attorney. They can help you navigate the rules that apply to your trust and understand how to use a credit card to preserve your Medicaid and SSI eligibility.

Contact Sharek Law Office at 412-347-1731 or click here to schedule a complimentary 15-Minute Call with our staff so we can help.


This article is a service of Sharek Law Office, LLC. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Life and Legacy Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge. Please note this is educational content only and is not intended to act as legal advice.

Using a Credit Card When You Have a Special Needs Trust

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Entrusted Legacy Law View Details

Entrusted Legacy Law

Elder Law 100 Pinewood Lane Suite #303, Warrendale, Pennsylvania, 15086

Our Firm Prepares You for Life What makes our firm different is that we were built with the needs of growing families in mind. We understand you are BUSY, you are growing, you are planning for a life of prosperity and you value ease, convenience and efficiency. You are raising children, and caring for elderly parents, while also working hard to build your own nest egg for a lifetime of support. You want to know youve made the best decisions for your family and that your plan will work when your loved ones need it most. You want to make sure your minor children would be raised by the people you choose, and never by anyone you wouldnt want, and that your teens and adult children are properly prepared to care for you and what you leave behind.  You want to feel confident that youve made the right choices, and handled everything so that you arent leaving behind a mess, when something happens. That is our focus as well. Weve developed unique systems to give you the same access to a Personal Family Lawyer as was previously only available to the super-wealthy, so you can have the guidance you need to build and maintain a life of prosperity and wealth. And, to keep your family out of court and out of conflict, which is the greatest risk to the people you love and all you have created, even if youve already worked with a traditional lawyer or created documents online. Our Team Is Here for You We encourage communication with our clients. In fact, weve thrown out the time clocks so you never have to be afraid to call with a quick question. Everything we do is billed on a flat-fee basis, agreed to in advance, so there are never any surprises. We have a whole team to serve you. When you call our office to ask your quick question, you wont have to wait hours or days for a phone call back. Youll get your question answered, right away. And, if you need to schedule a more in-depth legal or strategic call with your Personal Family Lawyer, a call will be scheduled when you're both available and ready for the call so we can make the very best use of your time and not waste your time by leaving voicemail after voicemail back and forth. And, we ensure the most important details of your planning are followed through on and your plan continues to work throughout your lifetime. We have a funding coordinator to ensure your assets are owned the right way throughout your lifetime and none of your assets will end up going through a long, expensive court process or being lost to the state because they were missed after your death. Weve created unique membership programs to keep your plan up to date year in and year out as well as give you access to our Trusted Team of Legal Experts for guidance on ANY legal or financial matter. One day you will need a lawyer. I dont know why and I dont know when, but when you do, you will be grateful you can call on us and well be here to advise you or get you out of a jam. We Help You Transfer Your Life and Legacy Lastly, we believe your financial wealth is only a small part of your overall Life and Legacy Planning which is made up of your far more valuable and most often lost upon incapacity or death intellectual, spiritual and human assets. These assets are what make you who you are, and sum up whats most important to you. And, a survey of inheritors has revealed that what they care about even more than inheriting your money, is inheriting these intangible assets.   Most estate plans only focus on the transfer of your financial wealth to the next generation. Most people have such great intentions of passing on the intangible, but very few ever get around to it. Its just not a priority, until its too late. How much do you know about your grandparents values? Their most prized personal possessions? How they felt about you? What they had learned during their lifetime? If you are like most people, you know very little. Thats why we build the capture and passage of these most valuable assets into every estate plan we create. Not only will we help you pass on your money, but also your values, your insights, your stories and your experience the truly valuable assets your loved ones care about the most.  Weve developed a tool that allows us to capture and pass on your whole family wealth, including your Intellectual, Spiritual and Human assets.  I cant go into all of the details here, but well definitely talk about it when you come in for your Life and Legacy Planning Session.

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