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Online crowdfunding sites like GoFundMe, YouCaring and Crowdrise provide easy-to-use platforms for those seeking to ease the financial burdens of friends or family. However, these sites generally do not require a person’s permission when someone begins a campaign for his or her benefit. This can put a disabled person receiving or seeking benefits in a precarious situation. Most means-tested programs impose very modest limits on the income and resources of beneficiaries. However, there are a few ways to help prevent raised funds from affecting benefit eligibility.
Upon receipt of funds, the beneficiary can spend the money down to an amount below the limit required by his or her benefits program. The money may be used for certain living expenses, including medical costs not covered by any benefit program or education expenses. To be effective, the spending must take place during the calendar month in which the funds are received.
A beneficiary can also have funds placed into a special needs trust. Ideally, the fundraising coordinator can make the money payable to an established third-party trust. If no third-party trust exists, the beneficiary, his or her parents, or legal guardian can create a self-settled special needs trust. However, these trusts have certain limitations and drawbacks. For example, self-settled trusts must be established before the beneficiary reaches age 65, and must contain a payback provision that will repay Medicaid upon the beneficiary’s death.
Crowdfunders should obtain permission from the beneficiary before beginning the fundraising process. If the recipient agrees to the campaign, he or she can then make plans that can prevent any raised funds from affecting anticipated benefits. If a person intends to raise funds for himself or someone else, it is also wise to first consult an experienced trusts and estates attorney.