When you’re caring for a loved one with a disability, protecting their financial future can feel overwhelming. You want to make sure they have the support they need—without losing access to vital government benefits like SSI or Medi-Cal.
A first-party special needs trust can help. This type of trust is designed to hold assets that belong to the individual with a disability, allowing them to keep their public benefits while still using the funds for extra care and support. At OC Wills & Trust Attorneys, we can help you understand how a first-party special needs trust works and what to expect.
What Is a First-Party Special Needs Trust?
A first-party special needs trust (also called a self-settled SNT) is a legal arrangement that holds money or assets owned by a person with disabilities. Once the assets are placed into the trust, the person can continue to qualify for needs-based government programs like Supplemental Security Income (SSI) and Medi-Cal. That’s because the trust, not the individual, technically owns the money.
There are some rules to follow. The trust must be irrevocable, which means it can’t be changed or canceled once it’s set up. It must also meet certain federal and California requirements, which we’ll walk you through below.
When Should You Consider a First-Party SNT?
There are a few common situations where a first-party special needs trust makes sense:
- Your loved one receives a settlement from a personal injury lawsuit.
- They inherit money or property outright rather than through a trust.
- They get a lump sum of retroactive disability payments from the Social Security Administration.
In each of these cases, the sudden increase in assets could push them over the income or resource limits for public benefits. That’s where the trust comes in. It holds the money in a way that doesn’t count against those limits.
The trust can be used for a wide range of expenses that government benefits won’t cover, such as:
- Personal care attendants
- Home modifications
- Therapies and treatments
- Educational expenses
- Recreation and hobbies
This gives your loved one more freedom and a better quality of life without risking the support they rely on.
Key Features and Requirements
A first-party special needs trust must meet certain conditions under federal and California law. These include:
- Age limit: The beneficiary must be under 65 when the trust is established.
- Who can set it up: The trust must be created by a parent, grandparent, legal guardian, or a court.
- Payback requirement: When the beneficiary passes away, any remaining funds must go to repay Medi-Cal for benefits received.
Another key component is selecting the right trustee. This person or institution is responsible for managing the trust and making distributions on behalf of the beneficiary. The trustee must follow strict rules about how and when funds can be used, and proper recordkeeping is important to avoid problems with benefit eligibility.
How We Can Help You Set Up the Right Plan
At OC Wills & Trust Attorneys, we work closely with families throughout Orange County and beyond to create thoughtful, legally sound plans that meet both immediate and long-term needs.
When we help you set up a first-party special needs trust, we’ll take the time to explain everything in plain English. We want you to feel confident in the choices you’re making for your loved one. We’ll also make sure the trust follows all legal requirements so it won’t interfere with SSI or Medi-Cal. It’s not just about getting the documents right—it’s about building a plan that truly supports your loved one. We’re here to make that process clear and manageable.
Contact Our Experienced Orange County First-Party Special Needs Trust Attorneys
If you’re dealing with a settlement, inheritance, or other funds on behalf of a loved one with a disability, don’t wait to explore your options. A first-party special needs trust can provide stability, flexibility, and continued access to government benefits. Reach out to OC Wills & Trust Attorneys today to schedule a consultation. We’re ready to help you take the next step in protecting your loved one’s future.
