There are a multitude of different instruments to help us achieve our financial goals. When planning for our own futures, we can create trusts, utilize different business structures, and transfer assets to our friends and families to help us reach our objectives. If we have another adult under our care, then it is even more important to make sure that we make careful plans. A special needs trust is one way we can help protect and plan for the future for vulnerable friends and family members.
A special needs trust is designed to provide disabled persons with a way to maintain certain assets while still remaining eligible for public benefits programs, such as Medi-Cal or Supplemental Security Income. A special needs trust can be funded with the assets of the trust beneficiary or can be funded by a third party. Regardless of the source of the assets provided for the trust, the disabled person will be named as the beneficiary with a trusted third person named as the trustee. The trustee will be responsible for managing the trust assets as well as making distributions for the benefit of the beneficiary, such as paying living expenses or medical costs.
There are a couple of important things to note about a special needs trust that has been funded with the assets belonging to the beneficiary. First, these trusts are subject to particular state and federal regulations so they must contain particular language to conform with statutes. Second, after the death of the trust beneficiary, the Department of Health Care Services must attempt to recover an amount equal to benefits paid by Medi-Cal for the care of the beneficiary from a beneficiary’s estate, but not from a trust. Finally, there are two different classifications for first party funded special needs trusts. Those established under 42 USC 1396p(d)(4)(A) can only be established for people under the age of sixty-five years old. A pooled special needs trust may be established for a person of any age, but those trusts must be managed by particular non-profit organizations. The funds are pooled together for purposes of maximizing investment opportunities and benefits, but each beneficiary will have his or her own separate account.
Call us today to talk to our California attorneys and lawyers about special needs trusts. We can discuss the needs of your friend or family member and what we can do to help you find a solution. Call 818.340.4479.
