Utilizing Special Needs Trusts to Protect Vulnerable Family Members

What Is a Special Needs Trust, and Can It Protect My Special Needs Loved Ones?

If you’re concerned about your special needs children or loved ones after you’re gone, understanding special needs trusts in California can be crucial for safeguarding the future of your loved ones with disabilities.

A special needs trust combines asset protection and estate planning. This combination helps ensure the long-term support of your loved one but doesn’t usually jeopardize the government benefits they may be receiving, such as Medicaid and SSI.

Special needs trusts (aka SNTs) in California are uniquely designed to benefit children and family members with disabilities and hold some somewhat unique combined characteristics, such as;

• Protection of assets for your loved one – Any assets held in a special needs trust do not count towards the beneficiary’s asset limits when applying for or receiving government benefits.
• Allowance of discretionary spending if necessary – The trustees have the power and authority to allow discretionary distributions to assist the beneficiary’s needs beyond what their government benefits may cover.
• More flexibility in their use – SNTs can be designed to meet the beneficiary’s unique requirements. This ensures more personalized support for your disabled loved ones’ needs.

All in all, a special needs trust can be a valuable and powerful legal tool that can be uniquely drafted to protect your special needs family member if you become incapacitated or die. However, SNTs are legally complex documents, and if you are considering an SNT, the help of a conscientious, knowledgeable, and experienced special needs lawyer is mandatory.

Does a Special Needs Trust Differ from a CalABLE Account?

California does attempt to give loved ones living with disabilities and their families varying options to deal with their future care, and a CalABLE account is one of them.

Having a CalABLE account may sometimes help with future planning for your disabled family members, but there are limitations on the scope and use of these accounts.

Suppose your disabled family member receives Medi-Cal benefits. In that case, a CalABLE account provides some tax-advantaged savings and allows your special needs family member to save up to $16,000 per year and up to $529,000 in their lifetime without losing their Medi-Cal benefits.

A CalABLE account is essentially a tax-advantaged savings account that earns interest for your disabled loved one. This interest is tax-free and does not count as income when applying for benefits.

So, your disabled family member can save for the future and disability-related expenses, but it doesn’t jeopardize their government benefits.

However, if you’re considering a CalABLE account, it’s still prudent to discuss all your goals and financial plans with a local, empathetic, and knowledgeable estate planning law team. CalABLE accounts may be suited to some situations but not to others. For example, a special needs trust is commonly significantly more financially flexible and can be uniquely designed to the specific needs and circumstances of your particular special needs family member.

Can A Special Needs Trust Help to Maximize My Disabled Family Member’s Benefits?

The simple answer is yes, it can in most cases. Most special needs trusts offer significant and valuable benefits in planning for the care of your special needs family member from both a legal and personal aspect. This commonly makes them a useful tool for families with members who have disabilities.

Just some of the legal benefits and protections are;

• An SNT will preserve their government benefits – One of the main advantages of an SNT is the ability to hold assets without affecting a beneficiary’s eligibility for government or state programs.
• Specific asset management and protection – SNTs are legally secure and help to manage and protect your disabled family members’ assets. This significantly helps to ensure that these assets are used appropriately and only for the benefit of the beneficiary.

Some of an SNTs personal advantages are;

• The assurance of long-term care – A professionally drafted and executed SNT ensures the beneficiary will have access to resources for their care and well-being well into the future.
• Enhancements in quality of life – SNTs can supplement government benefits and provide additional resources to beneficiaries to improve their quality of life. The SNT can provide resources for educational opportunities, personal care necessities, recreational activities, and much more.

Of course, every situation and set of circumstances differ, and these are complex documents designed to work in the future to benefit your special needs loved one for years to come. Therefore, they must be strategically drafted to meet, at times, very specific needs. Thus, a complete and detailed discussion and plan should be ironed out with a skilled professional specialist in these valuable legal tools.

Are There Different Types of Special Needs Trusts?

The area of the law that deals with special needs trusts and planning is a complex and specialized area of the law.

You know that if you have a family member with special needs, protecting them if you die or become incapacitated is always a vexing problem on your mind.

However, by obtaining the proper professional advice and utilizing an SNT, you can protect your loved one and provide them with a higher quality of life.

There are various types of special needs trusts available in California; however, the two most common are;

• The First Party Special Needs Trust – This SNT is drafted by a parent, grandparent, legal guardian, or the Court to benefit a family member with special needs. The Trust must be funded with funds owned by the person with the disability. This type of SNT is subject to payback provisions. This means that when the beneficiary dies, an appointed trustee must use any of the remaining trust assets to repay the state of California for all benefits they provided.
• A third-party special needs trust (SNT) is funded with another person’s assets, not the beneficiaries. It is the most common SNT used by parents or relatives to provide for a child with a disability. This type of trust is not subject to any payback provision.

With the professional help of a well-versed estate plan lawyer, a special needs trust can provide a well-designed and detailed framework for proper medical care and asset management and protect your family members’ assets from creditors and financial predators.

I Want More Information About Special Needs Trusts; How Should I Proceed?

Planning for the future of your special needs child or another family member can seem daunting. However, by obtaining the proper and most current information possible from a skilled, highly experienced, and empathetic special needs planning lawyer, you can be sure your special needs loved ones’ future is sound and secure.

The well-versed special needs planning lawyers at Cava & Faulkner have a long, compassionate, and effective track record of assisting Californian families in giving their special needs family members a long, happy, and fulfilling life.

Call them today at 916-831-7565 for a free consultation on your case. They will work tirelessly to put this constant, nagging worry behind you.