SPECIAL NEEDS TRUSTS

Do you want to leave assets to someone who is disabled and received SSI or Medi-Cal (Medicaid in other states)? Are you receiving those public benefit and afraid that an inheritance may interfere with your eligibility? Outright gifts and bequests can wreck havoc on the lives of beneficiaries if made improperly. Special Needs Trusts are designed to avoid those problems.

PUBLIC BENEFITS BACKGROUND

The federal Social Security Administration (Social Security) runs the SSI program. The California Department of Health Services (DHS) runs the Medi-Cal program (called Medicaid in other states) under an agreement with the federal government. County Departments of Public Social Services (DPSS), sometimes referred to as the "Welfare Department", administer the Medi-Cal program locally.

An SSI beneficiary receives support because the beneficiary is aged, blind, or disabled and his or her assets and income are low enough to meet a "means test". SSI is intended to pay for the beneficiary's food, clothing, and shelter. Once qualified for SSI benefits, the beneficiary then receives Medi-Cal automatically because he or she is "categorically needy". If the beneficiary receives too much income or has assets that are too large, he or she is likely to lose his or her SSI eligibility -- and the Medi-Cal coverage along with it.

WHAT IS A SPECIAL NEEDS TRUST?

Special Needs Trusts allow a disabled beneficiary to receive an inheritance, gift, lawsuit settlement, or other funds, in such a way that the funds will not be considered to belong to the beneficiary in determining eligibility for various public benefits, as discussed above.

Special Needs Trusts are typically designed to pay for education, recreation, counseling, and medical attention beyond basic daily living expenses that public programs may provide for. Such provisions may include medical and dental expenses, special needs equipment (such as mobility devises, or equipped vans), extended rehabilitation, education, and other possibly essential needs. If the trust is sufficiently funded, the disabled person may also receive money for various daily expenses or discretionary spending, computers, vacations, and other qualify-of-life enhancing expenses.

Special Needs Trusts are often created by a parent or other family member for a disabled minor or adult relative. Such trusts also may be set up in a will or revocable family trust as a means for an individual to leave assets to the disabled relative.