What is a Special Needs Trust?

If you are someone with a loved one who is considered special needs, you may have more to consider when it comes to estate planning than others. This is a sensitive topic, and you want to ensure your loved one is well taken care of when you pass on. Here are some of the questions you may have regarding a special needs trust:

What is the function of a special needs trust?

By establishing a special needs trust, you enable your beneficiary of the trust to benefit from supplemental resources, without discontinuing eligibility for certain government programs and public benefits. Generally, these programs will be Supplemental Security Income and Medicaid (Medi-Cal in California). 

What are the different types of special needs trusts?

There are three primary types of trusts in the state of California. They are as follows:

  • First-party special needs trust: This type of trust may only be established by a parent, grandparent, or legal guardian, and is funded with the beneficiary’s own funds. The beneficiary must be under age 65, and the trust is irrevocable. With this trust, public agencies such as Medicaid retain reimbursement rights on death. These trusts are most commonly created when a beneficiary is to inherit funds or is to receive funds via a lawsuit or settlement.
  • Third-party special needs trust: This trust is created by someone else for the beneficiary, and may be created during a lifetime or at death. Many of these trusts are funded using life insurance. Family members, such as grandparents, siblings, aunts and uncles, and even friends may make gifts to this type of trust.
  • Pooled special needs trust: These trusts take assets from different members and pools them into a larger investment fund. A pooled special needs trust has certain requirements that need to be fulfilled, such as the establishment of a disability and the need for said trust to be developed through a nonprofit organization.

How do special needs trusts work?

Special needs trusts may help your family:

  • Protect government benefits, since all assets belong to the trust, not the beneficiary
  • Provide supplemental funds for a lifetime of health, comfort, and well-being
  • Avoid probate
  • Provide for funeral arrangements

A special needs trust will also help your loved one receive the government benefits he or she needs, such as:

  • Medi-Cal
  • Supplemental Security Income
  • In-Home Support Services
  • HUD housing assistance

A special needs trust may either stand alone or be a part of a larger estate plan. Please contact one of our compassionate attorneys to ensure you are doing the right thing.

Contact our experienced California firm

Working with an experienced estate planning attorney, such as Jaci Feldman of the Woodland Hills, California, Law Office of Yacoba Ann Feldman, will ensure that you are taken care of when you need it most. Contact The Law Offices of Yacoba Ann Feldman to schedule a consultation today.