Can an SNT Pay for a New Car Without Issue?

There is no specific federal price cap or maximum dollar amount set by law.

However, while the law doesn’t name a number, your trustee as well as Social Security Administration (SSA) rules create practical limits you need to know.

1. The Sole Benefit Rule

The most important rule for any special needs trust (SNT) purchase is that it must be for the sole benefit of the beneficiary (the person with the disability).

• A “reasonable” purchase: If the trust buys a $100,000 luxury sports car for a beneficiary who cannot drive and has no need for high-end performance, the SSA might view this as a gift to the person driving it, rather than a benefit for the trust recipient.
• Adaptive equipment: There is virtually no limit on spending for medical necessity. If a van costs $40,000 and the wheelchair lift and modifications cost another $40,000, this is generally seen as a perfectly valid use of funds because it directly serves the beneficiary’s needs.

2. The Trustee’s “Prudent Person” Duty

The trustee has a legal duty to make sure the money in the trust lasts for the beneficiary's lifetime.

• Budgeting: If the trust only has $100,000 total, a trustee may deny a request for a $60,000 SUV because it would “drain the pot” too quickly.
• Luxury vs. Necessity: Most professional trustees (especially those managing pooled trusts) have internal policies against luxury vehicles. They prefer reliable, mid-range vehicles with good warranties to ensure the beneficiary has stable transportation for years to come.

3. SSI & Medicaid Asset Rules

If the beneficiary receives Supplemental Security Income (SSI), they are allowed to own one vehicle of any value without it counting against their $2,000 asset limit.

• The one- car rule: You can own a $10,000 car or an $80,000 car; as long as it is the only car, SSI doesn’t care about the price.
• The second-car trap: If the trust buys a second car, the value of that second vehicle will count as a resource and could cause the beneficiary to lose their benefits.

4. Key Factors the Trust Will Consider

Before approving a car purchase, a trustee will typically ask:

• Who will own the title? (Often, the trust stays on the title or keeps a lien on the vehicle.)
• Is there a valid driver? (Does the beneficiary or a primary caregiver have a license and insurance?)
• Can the trust afford the “extras”? (Insurance, gas, and maintenance are ongoing costs the trust must be able to sustain.)

SNT Car Purchases

Always get preapproval from your trustee before visiting a dealership. They often have specific requirements for the buyer’s order and how the check must be issued.