A fellow attorney recently referred someone to me who said, “I need a Special Needs Trust.” They followed it up with a smart question:
“How do Special Needs Trusts actually work?”
The Basics
A Special Needs Trust (SNT) is designed to protect the public benefits of someone who is blind, disabled, or over 65 and receiving needs-based assistance like SSI or Medi-Cal. These programs have strict asset limits—for example, SSI recipients cannot have more than $2,000 in their name.
SSI provides only a modest monthly benefit—currently $967—but it opens the door to much more:
-Medi-Cal (Medicaid)
-Housing assistance
-In-Home Supportive Services (IHSS)
-Regional center programs for the developmentally disabled
These services are invaluable for people with long-term care needs or significant disabilities.
Why a Special Needs Trust Is So Valuable
If someone receives an inheritance or personal injury settlement directly, they risk losing their benefits. But if those funds are placed in a properly drafted Special Needs Trust, they can retain their public benefits and still access resources to improve their quality of life.
This includes things public benefits don’t cover, such as:
-Travel or vacations
-Dental care like implants
-High-end wheelchairs
-Entertainment, electronics, or clothing
Who Can Create a Special Needs Trust?
Parents or grandparents can set up a trust for their child or grandchild.
If a third party creates the trust (not the person with the disability), there is no requirement to pay the government back.
If the person with the disability creates the trust with their own money, there will be a payback provision to reimburse Medi-Cal after they pass.
This is why planning ahead is crucial. If someone on SSI or Medi-Cal receives money directly, they must spend it down or set up a proper trust by the end of the month—or risk losing all benefits.
Don’t Wait Until Benefits Are Lost
If you have a loved one with special needs or a disability, now is the time to set up a plan that protects both their public benefits and their quality of life. I can help.
Give me a call to make sure your loved one is protected.
