The question of whether a trust can be used to commission customized mobility aids is a common one for Ted Cook, an Estate Planning Attorney in San Diego, and the answer is generally yes, with careful planning and adherence to the trust’s terms and relevant tax regulations. Trusts are versatile tools, but utilizing them for specific purchases like specialized medical equipment requires understanding the nuances of trust administration. These aids aren’t simply “comfort” items; they directly impact a beneficiary’s quality of life and ability to maintain independence, which often aligns with the core purposes many trusts are established to support. Ted often emphasizes that a well-drafted trust empowers beneficiaries and trustees to address evolving needs, including the procurement of bespoke mobility solutions.
What are the tax implications of funding mobility aids through a trust?
Navigating the tax implications is paramount. Generally, distributions from a trust to cover medical expenses, including customized mobility aids, are not considered taxable income to the beneficiary. However, the trust itself may be subject to ongoing taxes on accumulated income. If the trust is a “special needs trust” designed to supplement, not replace, government benefits like Medicaid or Supplemental Security Income (SSI), careful attention must be paid to the “Supplemental Security Income (SSI) program rules”. The IRS dictates that expenses must be “medically necessary” to qualify for potential deductions or exclusions. As of 2023, approximately 65 million Americans rely on some form of mobility aid, underscoring the significant need for accessible solutions. Ted routinely advises clients to maintain meticulous records of all expenses related to healthcare, including the commissioning of customized mobility aids, to ensure compliance and avoid potential tax issues.
How does a trustee authorize and oversee the commissioning process?
The trustee has a fiduciary duty to act in the best interests of the beneficiary. This includes diligently researching and selecting qualified vendors for customized mobility aids. The trustee should obtain multiple quotes, review specifications carefully, and ensure the equipment meets the beneficiary’s specific needs and safety standards. Often, it’s beneficial to involve a qualified healthcare professional, such as an occupational therapist or physical therapist, in the evaluation and selection process. I recall a case where Mrs. Eleanor Vance, a spirited 87-year-old, passionately requested a customized electric wheelchair with a built-in book holder and a small music system. Her existing wheelchair was causing her increasing pain and limiting her ability to pursue her beloved hobbies. Initially, the trustee, her son, was hesitant, viewing it as an extravagant request. However, after a thorough assessment by her physical therapist, who highlighted the therapeutic benefits of continued engagement in her hobbies, the trustee approved the purchase, significantly improving Mrs. Vance’s quality of life.
What happens when a trust doesn’t allow for these types of purchases?
Unfortunately, I’ve seen situations where trusts lacked the flexibility to address evolving healthcare needs. Mr. Arthur Penhaligon, a retired engineer, had a trust established decades prior that rigidly defined “medical expenses” as only covering traditional hospital bills and prescription medications. When he needed a custom-built prosthetic leg following an accident, the trustee, his daughter, was initially unable to authorize the purchase, citing the trust’s limited definition of eligible expenses. This caused a significant delay in Mr. Penhaligon’s recovery and forced his family to seek alternative funding sources. This highlighted a critical flaw in the trust’s original design—a lack of foresight regarding the potential need for specialized medical equipment. Roughly 26% of adults in the US live with a disability, highlighting the importance of having a trust that can adapt to varying needs. Ted always encourages his clients to consider future possibilities and incorporate language that allows for discretionary distributions to cover a broad range of healthcare-related expenses.
How can a trust be proactively drafted to facilitate these purchases?
Proactive drafting is key. A well-crafted trust should include broad language defining “healthcare expenses” to encompass not only traditional medical bills but also specialized equipment, therapies, and assistive devices, including customized mobility aids. It’s also beneficial to grant the trustee discretionary authority to make distributions for expenses that enhance the beneficiary’s quality of life and independence. After Mr. Penhaligon’s struggle, his family consulted Ted, who helped them amend the trust to include a clause specifically authorizing distributions for “adaptive equipment and assistive technologies designed to improve mobility, functionality, and overall well-being.” They then seamlessly funded a state-of-the-art prosthetic leg, allowing Mr. Penhaligon to regain his independence and resume his passion for woodworking. This case underscored the importance of forward-thinking estate planning and the power of a trust to provide for evolving healthcare needs. Ted continually advises clients to view their trust as a living document that can be adjusted to reflect their changing circumstances and priorities.
“A trust isn’t just about distributing assets after you’re gone; it’s about providing ongoing support and care for your loved ones throughout their lives.” – Ted Cook, Estate Planning Attorney
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
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