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Special Needs Trusts

Special Needs Trusts are a unique type of trust for individuals with some sort of disability, be it physical or mental.  Often disabled individuals are on public benefits such as SSI or Medi-Cal (which is the California version of Medicaid).  If they were to receive an inheritance from someone’s estate, money from another source, they could be disqualified from receiving public benefits.

 

A Special Needs Trust is one that allows the disabled beneficiary to continue receiving public benefits and still use the assets left to them to supplement their benefits.  “Special needs” that may be paid out of a special needs trust include such things as medical and dental care not covered by public benefits, a handicapped vehicle or room addition to accommodate their disability, computers, TVs, cultural activities, vacations, hobbies, and other items and activities to enhance the quality of life.

 

A third party special needs trust is one that is created usually by the parents or grandparents of a disabled person.  If the parents or grandparents were to leave such beneficiaries a cash bequest or real property, such assets would be deemed to be owned by the beneficiary and therefore jeopardize their SSI or other government benefits.   If the parents or grandparents create a special needs trust for the disabled beneficiary, the assets are not under the control of the beneficiary and thus do not affect their public assistance.

 

A first party special needs trust is one set up by the court, usually as a vehicle to accept and hold money from a settlement of a personal injury or medical malpractice case.  As part of the settlement, the court orders the establishment of a special needs trust with a trustee who will manage the assets and make distributions to the beneficiary for special needs not being covered by public benefits.  Such trusts must be established by the courts and provide for periodic accountings to the beneficiary and are subject to the approval of the courts.

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Law Offices of

Carol A.  Ronquillo

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