Heritage Law Group
What is the purpose of a special needs trust?
As the name implies, Californians can use a special needs trust to provide for a loved one who has unique needs due to an intellectual or physical disability.
Most often, a San Jose resident will want to create a special needs trust if the beneficiary, his or her loved one, also counts on government benefits Social Security SSI payments or Medicaid.
These government benefits are needs-based, meaning that the person receiving them must not make so much income, or have enough property, as to exceed legally mandated thresholds. In other words, these programs are reserved for those who truly need them and have no other way of meeting their necessities.
A disabled person's receiving a gift or an inheritance outright can leave him or her without the benefits that they truly need to continue receiving. Long-term, losing the benefits could even prove more costly than value of the gift or inheritance itself, meaning that what was meant to be an act of generosity turns out being a financial hindrance.
With a special needs trust, a person can legally provide for a loved one without compromising that person's eligibility for government benefits.
There are important limitations on what special needs trusts can and cannot do, and these trusts must be set up in a certain way so as to legally qualify as a special needs trust. Carelessness to these details could wind up costing a loved one his or her benefits or could create other problems.
This is one reason why those who may be thinking of setting up a special needs trust would turn to an experienced wills and trusts attorney for advice.