Sacramento Special Needs Planning Attorney

Protect Your Loved One’s Future with Special Needs Planning

If you have a disabled loved one, you probably worry about their future and wonder what you can do to protect them. One of the primary concerns for most families is how they can provide for those they care about without jeopardizing essential government benefits such as SSI or Medi-Cal.

One of the most reliable methods is to create a special needs trust, which can provide essential financial resources to the disabled person while preserving eligibility for benefits. Whether you are planning for a minor child or an adult, creating a special needs trust is an effective and reliable way to achieve your objectives.

Contact our law firm today and ask to schedule a free consultation with one of our Sacramento special needs trust attorneys to determine your legal options.

Will My Child Lose Their SSI Benefits if They Inherit Money?

Although your child could lose their government benefits if they receive a direct inheritance, utilizing customized estate planning strategies can preserve their eligibility.

Individuals who receive Supplemental Security Income (SSI) benefits are limited to the amount of assets they can have. For example, if your child receives SSI, they can have up to $2,000 in assets. If they receive a direct inheritance, it can be considered unearned income for that month, reducing their SSI benefits to zero. If the funds remain in their account into the next month, they will be considered a countable resource, effectively causing a suspension of benefits.

What is the Difference Between a First-Party and a Third-Party SNT?

If you are concerned about how a disabled loved one can access financial resources without jeopardizing their eligibility for benefits, a trust may be the right solution. A common question many clients ask is the difference between first- and third-party special needs trusts.

First-Party Special Needs Trust

A first-party SNT is funded with the beneficiary’s own assets, often derived from a lawsuit settlement or other forms of compensation. A trustee must manage the trust, which can be used to pay for expenses not covered by public benefits. Medi-Cal can recover any remaining funds in the trust to repay benefits it has paid on the beneficiary’s behalf.

Third-Party Special Needs Trust

A third-party special needs trust is funded with assets belonging to someone other than the beneficiary, such as a parent or grandparent. Unlike first-party SNTs, any funds that remain in the trust after the beneficiary passes away are not subject to recovery.

Pooled Trusts

Aside from first and third-party SNTs, pooled trusts are another viable option for those with disabilities. A pooled trust can be established for a disabled individual of any age, not just those under 65, as is the case for other SNTS. In a pooled trust, each disabled person has their own account, but funds are “pooled” together for investment purposes to fund the account. Pooled accounts must also be created and managed by a non-profit association.

What Can a Special Needs Trust Actually Pay for Without Triggering a Penalty?

The purpose of an SNT is to assist the beneficiary in paying for expenses not covered by their government benefits. To avoid eligibility issues, trust funds cannot be used to pay for basic support needs such as food or housing.

Instead, funds can be used to pay for:

• Education
• Transportation
• Travel
• Special equipment
• Medical and dental expenses not covered by benefits

Due to the legal complexities involved in creating a trust and ensuring the beneficiary retains access to their benefits, it is best to consult a knowledgeable attorney who can explain your options.

Should I Choose a Family Member or a Professional Fiduciary?

If you are considering creating a special needs trust, you may be unsure whether you or another family member should serve as the trustee or hire a professional fiduciary. One of the most common issues families run into is “burnout” from handling the duties involved in overseeing the trust. Although every family’s circumstances are different, one preferred option is to allow a professional fiduciary to handle tax filings and accounting matters. In contrast, a family member serves as a “care manager” or “trust protector” who oversees the beneficiary’s well-being.

Speak with a Special Needs Planning Attorney From Cava & Faulkner, Attorneys at Law, to Protect Your Loved One’s Future

Cava & Faulkner, Attorneys at Law, is proud to serve clients in the greater Sacramento area. Our trust attorneys have extensive experience helping families provide for those they care about by creating custom-tailored special needs trusts. These plans offer greater financial security while preserving eligibility for essential benefits.

Contact our Elk Grove, CA law firm today at (916) 831-7565 to schedule a free initial consultation.