Leaving assets, whether through gift, will, or a trust, to a beneficiary receiving means-tested public benefits will in most cases simply cause them to forfeit their eligibility and lose their benefits. In some cases, if the bequest or gift is of sufficient size to more than compensate for a lifetime of benefits, this may be acceptable. In most cases, however, such a bequest will simply cause a few years of ineligibility until the gifted funds are exhausted. Since there are excellent special needs planning alternatives, such a result is inevitably the result of poor or no planning, and a sad waste of family resources.
Thoughtful estate planning can preserve public benefits and supplement care to assure your family member will be provided for the way you want, even after your death. A properly drafted special needs trust can provide for a child or adult with a disability, and assure that there is funding for care beyond what is provided by public benefit programs like SSI, Medi-Cal, IHSS and the Regional Center. Assets in a properly drafted special needs trust will not cause someone to be disqualified from any of these programs.
A “Special Needs Trust” for a family member with a disability can be incorporated into a general family estate plan, or drafted as a separate trust to encourage broad family support and contribution. These are often referred to as “Third Party” Special Needs Trusts, as they are established by someone other than the beneficiary or their spouse. The most common scenario would be a parent establishing one for a child, but any friend or family member can establish and fund a special needs trust. We can also help make sure that other family members, such as grandparents, know what language to have in their plans to provide for their special needs grandchild. Such family coordination can be critical to avoid any problems or disruption of benefits, and to assure best results for the family member with disability. We unfortunately often see “special needs trusts” drafted with potentially disqualifying language by those unfamiliar with SSI, Medi-Cal and other program regulations. Make sure your attorney is experienced with special needs trusts and benefits program regulations.