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Am I allowed to use funds from my Supplemental Needs Trust to pay for groceries for my beneficiary?
The rule has always been that you cannot use trust funds to pay for food for a recipient of Social Security Income (SSI), without causing a reduction in benefits; but this is changing. Effective September 30, 2024, food will no longer be considered “In-Kind Support and Maintenance” (ISM) for SSI purposes. So yes, you will be able to use the money in the supplemental needs trust to buy food for your beneficiary!
SSI is a program created to provide support to individuals with limited income and assets who are disabled, blind, or over the age of 65. While the amount of SSI received varies for each person based on their own circumstances, the maximum a single person can receive monthly is $943, $1,415 for a couple. However, the amount received would be reduced by ISM.
SSI’s In-Kind Support and Maintenance (ISM) Rule
Traditionally, ISM has included the assistance of others by them paying directly for food and shelter. This would mean if you lived with someone rent-free or they provided you with your meals, you would have a reduction in your monthly benefits. Under the new rule, food will be removed from this definition leaving only outside assistance with shelter expenses as a cause for reduction. According to the Social Security Administration (SSA), examples of shelter expenses include “room, rent, mortgage payments, real property taxes, heating fuel, gas, electricity, water, sewerage, and garbage collection services.”
By removing food from this definition, SSA has stated an attempt to simplify the system by which individuals must report the assistance they receive from friends, family, supplemental needs trusts, and other sources, and to promote equity. The SSA has recognized that the recipients of SSI are a vulnerable population who often suffer from food insecurity. It is not consistent with the stated goals to impose these stringent reporting requirements which have often led to confusion, misreporting, and reduction in benefits.
Payments made from a supplemental needs trust for the benefit of a person on SSI have always been scrutinized to determine if they counted as ISM. Without food being included in the definition, a trustee will have the discretion to pay for the groceries or meals of the beneficiary without fearing a mistake in reporting the payments or a potential reduction in benefits. We used to say that the trust could pay for a movie ticket but not the popcorn… but no more!
After the September 30 enactment, applying for SSI and the subsequent reporting requirements will be much simpler, hopefully resulting in sufficient benefits being given to those in need.
Author: Britt Burner, Esq. is a Partner at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning and Elder Law.
