McNamara Law Firm, P.C. | 28212 Kelly Johnson Parkway, Suite 110 | Santa Clarita, CA 91355 (661) 287-3260 | info@theMcNamaraLawFirm.com
Elder Law, Estate Planning, Special Needs,
After-Death Administration
Administering a Special Needs Trust
Are you the Trustee of a Special Needs Trust? Or are you considering who to name as a Trustee?
Administering this type of Trust for a person with a disability can be very difficult, challenging, but also can be satisfying. If the RIGHT TRUSTEE is appointed, the trustee can really make a positive difference in the quality of life of the disabled person.
The trust rules and Medi-Cal/SSI rules can often be unclear, confusing, and sometimes defy common sense. Duties of the Trustee often depend on the type of disability, and the level of independence the beneficiary maintains.
The Trustee must make sure they understand the rules, and not make any distributions that would disqualify the disabled person from Medi-Cal and/or SSI. There may be other benefits involved, such as SSDI and Medicare, subsidized housing, Veterans Benefits, or other resources. The Trustee of a Special Needs Trust has a lot of responsibility, and must understand those responsibilities fully.
Special Needs Trusts
A Special Needs Trust, also called a Supplemental Needs Trust, is a specialized Trust established for the benefit of a disabled person who is receiving, or may receive, needs based public benefits, like Supplemental Security Income ("SSI") and Medi-Cal (Medicaid in other states).
The qualification requirements are very strict to receive these benefits. A recipient may only have a maximum of $2000.00 in non-exempt assets. An inheritance from a parent or grandparent to the disabled beneficiary can cause a loss of very important benefits if the disabled person receives an inheritance, and now suddenly has too much money to receive those benefits.
What Should Be Done? Instead of leaving a gift or inheritance directly to a disabled child or disabled beneficiary, it is better to establish a "third party" Special Needs Trust. This type of trust is typically set up by a parent or grandparent, and any inheritance for the disabled beneficiary will pay to the Special Needs Trust, rather than directly to the disabled person. The assets then are used to enhance his or her quality of life, while keeping the public benefits intact.
If you have a family member who is receiving Medi-Cal and/or SSI, it is very important you consider establishing a Special Needs Trust.
California now allows "ABLE Accounts". It is also known as a 529 ABLE, and is a savings program for eligible people with disabilities.
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