Understanding Special Needs Trusts: Protecting Loved Ones Without Sacrificing Benefits

Understanding Special Needs Trusts: Protecting Loved Ones Without Sacrificing Benefits

A properly drafted Special Needs Trust can preserve Medi-Cal, SSI, and other benefits — while still supporting your loved one financially.

If you have a loved one with a disability, you may be wondering how to provide for them financially — without putting their eligibility for government benefits at risk. A Special Needs Trust (SNT) may be the best way to do both.

At the Law Offices of Christopher M. Brainard, Esq., we help California families create and integrate Special Needs Trusts into their estate plans with clarity, care, and precision.

What Is a Special Needs Trust?

A Special Needs Trust is a legal tool that allows a person with disabilities to receive financial support — without disqualifying them from essential needs-based government programs such as:

  • Supplemental Security Income (SSI)
  • Medi-Cal (California Medicaid)
  • Section 8 Housing Assistance
  • In-Home Supportive Services (IHSS)

Assets placed in an SNT are not counted as personal assets under benefit eligibility rules — preserving access to critical services while allowing for extra financial support.

Why Use a Special Needs Trust?

Even a small inheritance or gift can cause a person with disabilities to lose government benefits. An SNT protects their eligibility while allowing funds to be used for things like:

  • Therapy or medical care not covered by Medi-Cal
  • Personal aides or caregivers
  • Education and job training
  • Housing, travel, and hobbies

Types of Special Needs Trusts

There are two primary types of SNTs:

1. Third-Party Special Needs Trust

  • Funded by a parent, grandparent, or loved one
  • Often part of a living trust or will
  • Not subject to Medi-Cal estate recovery

2. First-Party Special Needs Trust

  • Funded with the beneficiary’s own assets (e.g., settlement or inheritance)
  • Must comply with federal rules
  • Subject to Medi-Cal payback upon the beneficiary’s death

Benefits of a Special Needs Trust

  • ✔ Preserves eligibility for SSI, Medi-Cal, and other public benefits
  • ✔ Protects assets from misuse
  • ✔ Allows for supplemental support and improved quality of life
  • ✔ Can be customized to fit the unique needs of your family

Disadvantages to Consider

  • ⚠️ Must follow strict rules — missteps can lead to disqualification from benefits
  • ⚠️ Requires ongoing trustee management and reporting
  • ⚠️ Setup and administration costs
  • ⚠️ First-party trusts may be subject to government estate recovery

Work with an Experienced Estate Planning Attorney

Creating a Special Needs Trust the right way is critical. Our office provides tailored estate plans that integrate public benefits planning — with compassion and attention to detail.

Whether you’re planning for a child, sibling, or dependent adult, we can help you understand your options and build a plan that protects your loved one’s future and preserves their access to services.

📞 Contact Us Today

Schedule a confidential estate planning consultation to determine whether a Special Needs Trust is appropriate for your situation.

📱 Call/Text: (310) 266-4115
🌐 Website: www.LawBrainard.com
📝 Estate Planning Intake Form: Click Here to Start

*This blog is provided for informational purposes only and does not constitute legal advice. Reading this blog does not create an attorney-client relationship. A formal agreement is required to establish representation. Please contact us to determine how we can assist you.*

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