[WSBAPT] Question on Third Party Special Needs Trusts

[John Yip]

I am drafting a third party special needs Trust and have a few questions:

1. Is it ever permissible for the Trust to provide the beneficiary a
monthly allowance (e.g. $1,000), provided that the beneficiary spends the
funds only on goods/services not covered by a government program?  Would
such a monthly allowance potentially jeopardize the Trust's purpose or the
beneficiary's ability to continue receiving government benefits?

2. Does the Trustee and/or Grantor incur any liability if, for example, the
Beneficiary presents a request for payment for goods that the Beneficiary
swears is not covered by a government program, the goods do turn out to be
covered, and the Beneficiary loses government benefits as a result?  Can
the Trust include an exculpation clause that provides something along the
lines of the Beneficiary representing that he made reasonable inquiry as to
whether a particular requested item is already covered by a government
program and releasing the Trustee/Grantor from liability if a Trust
disbursement causes the Beneficiary to lose government benefits?

Many thanks,
John Yip
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