The Special Needs Trust

The Special Needs Trust

If a person has a child who is on Medi-Cal or SSI, that child would be disqualified from these programs if he or she inherited assets outright. If the child became the beneficiary of a trust created by his or her parents which gives the trustee discretion to make payments for his or her health, education, support and maintenance, the child would still be disqualified from these programs.

To avoid such a result, parents can create a revocable trust that provides that when both of them have died, the portion of the assets allocated to that particular child will pass to a special needs trust. The special needs trust is irrevocable and provides that the trustee will only make payments to the child for things that are above and beyond the benefits that the child can receive from the programs that he or she is on. A special needs trust, if properly drafted, should not be considered as a resource of the child.

When the parents die and the special needs trust is created, the trustee needs to explore what benefits the child is eligible for so that the trustee will not inadvertently disqualify the child from Medi-Cal or SSI,which result could occur if the trustee pays for items that are covered by Medi-Cal or SSI.

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About randyspiro

I am a super lawyer in California with dual specialization in Estate Planning and Taxation.
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