Will My Family Benefit From A Special Needs Trust?

If you or someone you know has a child or other family member who has special needs and receives government assistance, a Special Needs Trust may be something to consider.

A Special Needs Trust, or SNT, is a trust designed to preserve a person's eligibility for government assistance programs that are based on a person's finances. These are known as "need-based" programs, and include Supplemental Security Income (SSI) and Medi-Cal. A Special Needs Trust allows the person to receive government assistance, but still benefit from an inheritance.

Why Is A Special Needs Trust Necessary?

Certain types of government assistance commonly received by persons with disabilities are based on a person's financial needs. SSI and Medi-Cal limit the amount of resources a person may have on hand and still remain eligible to receive benefits. If a parent, grandparent, sibling or others are not properly informed and name a loved one in their will or trust or make a gift while living, that gift or inheritance may cause the recipient to lose his/her eligibility for their government assistance. The gift of inheritance may cause the person to exceed the amount of assets and resources they are allowed to have to be eligible for the assistance.

How Does It Work?

For example, Mary and Tom have an autistic child, Sally. Sally currently is enrolled in Medi-Cal for her health care, and may continue this way for her entire life. Mary and Tom own a home and some investment accounts. They would like to plan for Sally's inheritance when they die, so that their entire estate will pass to Sally. If Sally were to receive the inheritance directly, she would exceed the asset and resource limits, and lose her Medi-Cal eligibility.

However, if Mary and Tom create a Special Needs Trust for Sally, the inheritance will be placed in the trust, and the trustee (chosen by Mary and Tom) will manage and spend the money on Sally's behalf — and she will not lose her Medi-Cal eligibility.

There are different kinds of Special Needs Trusts. Each type will address a different set of circumstances. If you think that you or someone you know might benefit from a Special Needs Trust, contact my office or call 805-624-4431 for a consultation to discuss your family's needs.