Special Needs Trusts in California

From the desk of San Diego (Carmel Valley) Living Trust Attorney, Kristina R. Hess:

Serving San Diego County Families with their Estate Planning…

I.  Special Needs Trust (or Supplemental Needs Trust) – There are two types of special needs trusts, those created by third parties (e.g. parents or grandparents) and those created by oneself for oneself (self-settled special needs trusts).  This post discusses third party special needs trusts.  It is important to note that self-settled special needs trusts have a lot of restrictions and often may require court approval.

Third party special or supplemental needs trust are set up by a third party – a parent, grandparent, court, or relative.  John and Julie have a special needs daughter and they are concerned about their daughter’s ability to be self-sufficient and survive on her own when they are no longer here.

They were relieved when their daughter qualified for supplemental social security (SSI) and other governmental benefits but they know that this may not last forever.  In addition, they have accumulated a home, real estate investments, and other assets over the years and they want to make sure that their daughter can have access to her inheritance if she needs it for her supplemental needs but that she does not receive the inheritance in such a way that she would be disqualified from receiving governmental benefits.

Thus, John and Julie want to set up a special needs trust for their daughter who also lives in San Diego, California.   John and Julie and other relatives can fund the special needs trust with annual gifts during their lifetime, and can direct their daughter’s portion of her inheritance to the special needs trust through their own revocable living trust, so she will have the assets should she need them for her supplemental needs after they are gone.

A well-drafted special needs trust provides that the trust funds are only available to the beneficiary for supplemental needs so that the beneficiary can qualify for governmental assistance.  If at some point in the future the beneficiary no longer qualified for governmental assistance or no longer has special needs, then, the trust can also provide that the funds can be made available to the beneficiary if certain circumstances occur.

The special needs trust would also have provisions for any left over trust assets once the daughter passes away.

In sum, a special needs trust is a useful estate planning vehicle to hold assets for individuals with disabilities or special needs such that they can still qualify for governmental assistance.  The trustee of the special needs trust, would have discretion to make distribution only for supplemental needs of the beneficiary.  The special needs trust can also provide for coordination with a care manager and indicate what type of living arrangements and care the creators of the trust desire for the beneficiary.  It is a great way for parents to have peace of mind that their special needs son or daughter will be cared for when they are no longer here.

If you have a son or daughter with special needs in California and would like the peace of mind knowing they will be cared for when you are no longer here, call our office today.  We serve San Diego families and can provide assistance throughout California.  Call 858-461-6844 or e-mail admin@krhess.com and we can tell you how you can also pass on more than material wealth to future generations.

Create Legacies today,

Kristina Hess

San Diego Trust and Estate Attorney, Living Trusts, Will, Guardianship, Special Needs Trusts located in Del Mar, Carmel Valley