How Does a Special Needs Trust Work in California?

 Posted on July 25, 2024 in Trusts

If you have family members with disabilities, you know how important it is for you to plan for their future financial security. You might want to set up a trust to make sure that their needs will be taken care of even if you are not there to do it yourself. For people in your situation, a special needs trust (SNT) is often recommended. It can allow you and your family to provide for your relative’s ongoing support and care without jeopardizing their eligibility for government benefits like supplemental security income (SSI) and Medi-Cal (California’s Medicaid program). If you want to plan for a loved one’s future, speak with a skilled Los Angeles, CA estate planning lawyer about whether an SNT is a good idea for you.

What Does a Special Needs Trust Do?

An SNT is specifically designed to supplement, rather than replace, government benefits that people with disabilities receive. When you place assets into an SNT, they can be used to enhance the beneficiary’s quality of life without disqualifying them from government assistance programs. A trust can cover various expenses that are not covered by public benefits, including education, rehabilitation, personal care attendants, and medical and dental care.

In California, there are two main types of SNTs:

• Third-party SNT: This trust is established by a third party, such as a parent, grandparent, or legal guardian. It uses that third party’s assets to benefit the individual with special needs. This type of SNT is commonly included as part of an estate planning strategy.
• First-party SNT: Also known as a D(4)(A) trust, this uses assets that belong to the individual with special needs. These assets can include funds received through inheritance, personal injury settlements, or court judgments. There are strict legal requirements that this type of SNT needs to comply with to preserve the individual’s eligibility for government benefits.

Setting Up an SNT

Having an SNT as part of your estate planning is a proactive way to arrange for your loved one’s financial stability and access to resources even if you are not around. It also offers safeguards against situations you cannot predict and ensures that your relative’s needs are met with dignity and respect.

Setting up an SNT requires careful planning and adherence to state and federal regulations. It is essential to consult with an experienced estate planning attorney who understands the complexities involved, including trustee selection, funding strategies, and ongoing administration.

Schedule a Free Consultation with an L.A. County, CA Estate Planning Lawyer

If you are thinking about planning for the financial future of your loved one with special needs, speak with an experienced Los Angeles, CA estate planning attorney about an SNT. At Law Office of David Schechet, we work hard to give confidence and peace of mind to our clients and their families. Call us at 800-282-4731 so we can work on a plan that suits your needs.