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What is a Special Needs Trust?

A special needs trust is a kind of living trust in which individuals may provide for a disabled person’s financial future.  The special needs trust allows the disabled beneficiary to keep his or her governmental benefits, such as Medicaid, MediCal, and Supplemental Security Income, while receiving benefits from the trust.  For many governmental benefits, low income or low cash asset are required, so the beneficiary would lose governmental benefits if they were to inherit money without a special needs trust.  The trust money will go toward luxuries the beneficiary would not be able to afford on public funding.

In a special needs trust, a trustee will distribute the allowed funds to the beneficiary according to the terms of the trust being mindful of governmental rules for benefits.  As a result, the beneficiary will receive funds according to the trust although he or she cannot directly access the assets in the trust.  Therefore the beneficiary is provided for while keeping his or her governmental benefits.

What are the Benefits of a Special Needs Trust?

1. Beneficiary will keep his or her government benefits.

1. The trust does not have to notify the state or Medi-Cal after the beneficiary’s death.

1. Beneficiary gains from the trust, yet has no direct access to trust funds.

What are the Disadvantages of a Special Needs Trust?

1. The trust become irrevocable upon the death of the creator.  As a result, the special needs trust also becomes irrevocable and will not change even in the event the beneficiary regains mental capacity.  However, amendments may be made with court approval.