Parents and family members of people with special needs have extra considerations to take into account while planning their estate. If an individual depends on Medi- Cal, SSI, or other public services for their daily needs, simply naming them as a beneficiary of an estate can cause them to lose their eligibility for these services. Creating a Special Needs Trust, also known as a Supplemental Needs Trust, can benefit disabled individuals in several ways.

Eligibility for SSI and Medicaid

By establishing a Special Needs Trust, testators can avoid making beneficiaries ineligible for benefits like SSI, Medi-Cal, and housing assistance. If the size of an estate is enough to provide completely for an individual’s needs for their entire life, this may not be an issue—however, this situation is uncommon and most people want to ensure that their loved one can get the public assistance they need for stability. If the Special Needs Trust specifies that the trust supplements the services that the individual receives, that the trustee decides when and how to use the funds on the beneficiary’s behalf, and that the beneficiary cannot give away or sell their part of the trust, the assets typically will not be counted against the beneficiary when considering their eligibility for public services.

Providing Other Services

A Special Needs Trust can provide for the other needs of the beneficiary. While state-funded healthcare may meet many of the beneficiary’s medical needs, some needs are not subsidized, including eyeglasses, rehabilitation services, home health aides, dental care, transportation, and more. A Special Needs Trust can ensure that the beneficiary gets the care they need for a fulfilling and healthy life.

Which Assets Can Be Included in a Special Needs Trust?

A wide range of assets can be used to fund a Special Needs Trust. Options include stocks, bonds, pension benefits, life insurance, cash, real estate, personal property, and settlements.

Different Types of Special Needs Trusts

California recognizes two types of Special Needs Trust. A first party SNT is funded by the beneficiary. It may be funded through legal settlements, estate awards, or owned assets. The more common option is the third party SN, which is funded by assets owned by someone other than the beneficiary. A trust may be funded solely by one party or it may be a pooled SNT, which combines assets from multiple people. A pooled trust is set up through a nonprofit organization, which then handles tax needs, investment choices, and trustee responsibilities.

Setting up a Special Needs Trust can allow your assets to benefit your loved ones long after your passing, but you must follow very strict requirements and standards to ensure that your estate follows all applicable regulations. Contact MMZ Law at (909) 256-6702 to discuss your estate planning needs.