March 2, 2026
Moving from Home to Assisted Living: How Your Special Needs Trust Can Help
I often work with families during big life transitions as a Special Needs Certified Financial Planner®. One of the most common questions I hear involves housing. For many people with disabilities, a Special Needs Trust (SNT) actually owns the home they live in. But what happens when that home is no longer the best place for them? If a beneficiary needs to move into an assisted living facility, can the trust sell the house and use that money to pay for their new care?
The short answer is yes, but there are some important rules to understand to make sure everything stays on track.
Can the Trust Sell the House?
If the Special Needs Trust holds the title (the legal ownership) of the home, the trustee has the power to sell it. Once the house is sold, the money from that sale doesn't go to the individual with a disability. Instead, it goes right back into the trust’s bank account.
This is actually very helpful because it keeps the money "invisible" to the government programs like Supplemental Security Income (SSI) and Medicaid. Since the individual never touches the cash personally, they don’t risk losing their essential benefits because they suddenly have too much money in their own name.
If you are considering selling a home held within a trust, it is vital to have a professional team on your side. Please contact me today for a CFP® consultation so we can review your trust documents and ensure the sale is handled correctly.
Paying for Assisted Living
Once the house is sold and the trust has the cash, those funds can definitely be used to pay for assisted living. Assisted living costs are usually broken down into two parts:
- Care Services: This includes help with bathing, dressing, taking medicine, and other medical support.
- Room and Board: This is the cost of the actual apartment and the food provided by the facility.
How This Affects SSI Benefits
It is important to know that if the Special Needs Trust pays for the "Room and Board" part of assisted living, the government may view this as "In-kind Support and Maintenance." Basically, because the trust is paying for food and shelter, the Social Security Administration might reduce the person’s monthly SSI check by about one-third.
However, even with that small reduction in the monthly check, using trust funds to pay for a high-quality assisted living facility is usually a great deal. The trust can pay for the care, the room, and even extra things like specialized therapy or entertainment, ensuring a much better quality of life.
Understanding how these payments affect your monthly benefits can be confusing. We can run the numbers to see how your specific benefits will change.
Thinking About Taxes
When a home is sold for more than it was originally bought for, there is usually a "capital gains tax." However, if the trust is set up a certain way—often called a "Grantor Trust"—it might be able to use a special tax break. This rule allows people to avoid paying taxes on a large portion of the profit if the house was their primary home.
Because every trust is written differently, you should always check with a financial expert or a tax professional before the sale is finalized. You want to make sure you keep as much money as possible inside the trust to pay for future care.
Planning Your Next Step
Transitioning from a private home to assisted living is a major change, but a Special Needs Trust is designed for exactly this purpose. It provides a safety net that allows a person to move into a safer environment without losing their government support.
If you are ready to plan for the next stage of care for your loved one, I am here to guide you through every financial step. Schedule a meeting with a Special Needs Certified Financial Planner® today to create a strategy that provides security and peace of mind.