Caring for a family member with special needs, whether a child or a dependent adult, presents unique challenges. Many families worry about how their loved ones will be cared for after they pass, especially if they can’t work full-time or have ongoing medical concerns that require special care.
Fortunately, California families have more options than ever, including establishing a Special Needs Trust (SNT) that can fund their care without jeopardizing their loved one’s eligibility for government and medical benefits.
The precise requirements of setting up a special needs trust can be complicated. As such, it’s important to seek advice from a qualified estate planning attorney.
What is a special needs trust?
A special needs trust works similarly to other trusts: the trust owner places assets or funds into the trust, which the trust administrator releases according to set instructions after the owner passes. The difference between an SNT and other trusts is the limits set for the beneficiary.
SNT trusts help beneficiaries who can’t manage their own finances due to a physical or mental disability. These individuals may also need help caring for their basic needs or living independently.
Special needs trusts can be drafted to suit the needs of the beneficiary, such as paying for an in-home caregiver or securing accommodations in an assisted living facility. They can also help supplement other needs, such as specialized education, vocational rehabilitation and training, and housing. The trust is as specific as the owner determines it should be to ensure their loved one’s needs are met.
Structuring the Trust for Maximum Benefit
The framing of the special needs trust ensures that the beneficiary still meets the income threshold for benefits like SSDI, Medicaid, Assisted Living waivers, and other government programs.
Medicaid benefits can cover not just healthcare but other needs, like accommodations in a group home or transportation. Because government benefits are awarded based on income, it’s important to preserve the special needs individual’s income status.
The advice of a professional estate planning attorney is invaluable when drafting the special needs trust, as the language of the trust needs to be precise.
The trust must stipulate that the funds are to provide supplemental care beyond what the beneficiary’s governmental benefits cover and aren’t intended to be a form of basic support. Your attorney will reference the specific portions of California and U.S. law that clarify your intentions.
Even if you don’t think your special needs loved one requires government benefits, you never know how their needs could change in the future or what new programs may help them in the future. If you’re planning on including them in your estate plan, setting up a special needs trust allows you to err on the side of caution.
SNT Beneficiaries Have Limited Control Over Their Trusts
Unlike other types of trusts, such as revocable living trusts, the beneficiary of an SNT cannot manage their trust themselves. The responsibility of serving as trustee falls to either a family member or a third party appointed by the trust’s creator. Because the beneficiary can’t direct the funds and assets in the trust, it’s not considered income as it relates to benefits eligibility.
Creating a Special Needs Trust in Orange County
If you think a special needs trust might be the best way to care for your loved one and ensure they’re provided for after you pass, we can help you take the necessary steps to set one up.
OC Wills & Trust Attorneys in Orange County, CA, is an estate planning law firm focused on helping families create estate plans that meet their needs. Contact us today for more information.
