Setting up a special needs trust can be an important step for families with a loved one who has a disability.
What is a Special Needs Trust?
A special needs trust is a legal arrangement that allows assets to be held and managed for the benefit of a person with a disability, without jeopardizing their eligibility for government benefits.
Why Set Up a Special Needs Trust?
In California, there are several reasons why setting up a special needs trust may be a wise decision.
Protect Government Benefits
One of the primary reasons for setting up a special needs trust is to protect a person with a disability’s eligibility for government benefits. In California, these benefits can include Supplemental Security Income (SSI), Medicaid (Medi-Cal in California), and other state and federal programs. These benefits are often essential for people with disabilities, providing them with critical support for housing, healthcare, and other basic needs.
However, these programs have strict eligibility requirements, and many have asset limits. If a person with a disability receives a significant inheritance or settlement, for example, they may become ineligible for these benefits. A special needs trust can help avoid this problem by allowing the assets to be held for the benefit of the person with a disability, without being counted against their eligibility for government benefits
Manage Assets Effectively
Another reason to set up a special needs trust is to ensure that assets are managed effectively for the benefit of the person with a disability. Many people with disabilities may not be able to manage their own financial affairs due to cognitive or other impairments. In these cases, a trustee can be appointed to manage the trust assets and ensure that they are used appropriately to meet the person’s needs.
In California, the trustee must be carefully chosen, and there are specific legal requirements that must be followed. For example, the trustee must be someone who is trustworthy and has the necessary skills to manage the trust assets. They must also be familiar with the legal and financial requirements of special needs trusts in California.
Provide for Future Needs
A special needs trust can also be used to provide for the future needs of a person with a disability. This is especially important if the person is likely to require long-term care or other significant expenses in the future. By setting up a special needs trust, the person’s family can ensure that there are funds available to meet these needs, without jeopardizing their eligibility for government benefits.
In California, there are specific rules that must be followed when setting up a special needs trust to ensure that it is used appropriately for the benefit of the person with a disability. For example, the trust must be irrevocable, and it must be established for the sole benefit of the person with a disability.
Reduce Family Stress
Finally, setting up a special needs trust can help reduce family stress and ensure that everyone is on the same page when it comes to caring for a loved one with a disability. By establishing a trust, families can avoid potential conflicts over how to manage assets, and they can ensure that everyone is clear about their responsibilities and roles.
In California, it is especially important to work with an experienced attorney when setting up a special needs trust. The attorney can help ensure that the trust is established correctly and that all legal requirements are met. They can also help families navigate the complex rules and regulations governing special needs trusts in California.
Overall, there are many reasons to consider setting up a special needs trust in California. Whether you are looking to protect government benefits, manage assets effectively, provide for future needs, or reduce family stress, a special needs trust can be an essential tool for families with a loved one who has a disability. If you are considering setting up a special needs trust in California, it is important to work with an experienced attorney who can help guide you through the process and ensure that all legal requirements are met.
Attorney John McCarthy is an award-winning, estate planning attorney. He has the knowledge, training, skill, and compassion, necessary to help you set up a special needs trust for your loved one. Central Coast Estate Planning offers a 100% free, completely confidential consultation. What do you have to lose? Schedule your free consultation, with an award-winning attorney today.
