Special Needs Trusts: What Are They? And Should You Have One?

Why Would Someone Need a Special Needs Trust?

In California, if you want to take care of a loved one with special needs by leaving them money or property, you may think your will or living trust will suffice. However, if your loved one receives means-tested government benefits, your bequest could ​prevent them from receiving those crucial benefits. A Special Needs Trust ​("SNT") can allow your loved one to receive ​money without disqualifying them from receiving their public benefits.

What is a Special Needs Trust?

SNTs are established for a person who has a disability and is receiving or is likely to receive means-tested public benefits. Means-tested public benefits include SSI and Medi-Cal, IHSS, Section 8, food stamps, Regional Center benefits, group homes, traumatic brain injury programs, and​ state waiver programs.

The goal of SNTs is to preserve your loved one’s public benefits while also supplementing their unmet needs with additional money held in the SNT. Traditionally, this type of trust is established by parents for their children but can also be established for a sibling providing for another sibling, a child providing for an aging parent, for a friend, or even by the individual themselves. 

How Can You Set Up a Special Needs Trust?

There are several types of SNTs. In many cases, SNTs are funded with assets belonging to a third party(someone other than the trust’s beneficiary), such as a parent or sibling. This is called a Third Party SNT. However, SNTs can also be funded by beneficiaries themselves with their assets, often from an award or settlement. This is called a First Party SNT.

Working with an experienced estate planning attorney to determine the source of your loved one’s public benefits and the source and amount of income your loved one receives will help inform the type of SNT that will suit your loved one. 

If you or a friend or family member could benefit from an SNT, contact the trust and estate attorneys at Bellator Law Group at (619) 232-8377 for a free consultation.

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Photo by NathanAnderson on Unsplash

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