Paying past debt with supplemental needs trust

[jharber15]

I am in Pennsylvania and am just starting to manage a trust for a sibling. As we get the trust funded, I understand that I am able to pay past debts with supplemental needs trust and there are some things to clean up. I am having a hard time getting detailed documentation on what was in the past debt since it is in collections. The debts in collections have been negotiated to a reasonable rate and we're now at a point to pay them. I've asked my sibling to document what was in the past debts for me, so I can have record showing that we're operating by the bounds of the supplemental needs trust. Is this enough for me to move forward? Is there anything else that I should be concerned with prior to paying off the debt?

 

[Taxing Matters]

Without reading the actual terms of the trust and knowing what information you do have about the debt, it's really not possible to say if you might have a problem paying it. Using the term "special needs trust" does not tell me exactly what the trust provides. There is no single standard special needs trust; the exact language matters. If your sibling is not currently competent to handle his/her own finances, then I'm not sure I would rely on what the sibling told me the debt was for. You might want to have the trust reviewed by a trust attorney if you have concerns about whether this payment is proper for the trust to make.