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Special Needs Trust

Pasadena - Glendale California Special Needs Trust PhotoWright Kim Douglas located in Glendale California offers attorneys experienced in the drafting and administration of special needs trust, also known as supplemental needs trust.  The Omnibus Budget Reconciliation Act of 1993[1] specifically authorizes the creation and use of these trusts to hold assets belonging to the recipient of needs-based government benefits.  The assets and income of a special needs trust are not counted towards the resource and income limit for the purpose of determining eligibility of needs-based government benefits, such as Supplemental Security Income (SSI)  and Medicaid  (known as Medi-Cal in California).  A wide variety of disbursements from the special needs trust can be made for the benefit of the beneficiary for medical and other purposes, although monies should never be given directly to the beneficiary.  The beneficiary cannot serve as the trustee of his or her own special needs trust. 

There are two basic types of special needs trusts: first party special needs trusts and third party special needs trusts.  A first party special needs trust is funded with assets belonging to the beneficiary, such a settlement or an inheritance.  A first party special needs trust requires a provision stating that any remaining trust funds after the death of the beneficiary (or upon termination) will be used to reimburse the state’s Medicaid agency for its expenditures during the lifetime of the beneficiary.  Third party special needs trusts are created by a third party – usually a parent or grandparent as part of their estate plan – for a disabled beneficiary.  A third party special needs trust does not require a provision that the trust reimburse the state's Medicaid for its expenditures during the lifetime of the beneficiary at termination.  If you care for a family with a disability, it is important that you consult with an attorney to ensure that your loved one is protected should something happen to you.


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