Pasadena Special Needs Planning Lawyers Assisting Clients Looking to Safeguard the Future of a Loved One

Parents or guardians of an individual with special needs often have to be careful when planning for the financial future of their loved one while making sure he or she can still be eligible to receive basic government benefits. Our attorneys discuss the do’s and don’ts of special needs planning and the role a special needs lawyer can play in helping parents protect the future of a special needs dependent.

Do I Need to Make Special Arrangements to Leave an Inheritance to a Loved One With Special Needs?

Many individuals with special needs are unable to enter or return to the workforce, which means they rely on SSI (Supplemental Security Income) or Medi-Cal to cover their basic needs. This also means there are strict income guidelines that a special needs individual must fall under in order to be eligible for those benefits.

If a special needs person is suddenly given a significant inheritance or financial gift from a friend or close relative, it may affect their ability to continue receiving government benefits, because the new assets may push them over the eligibility threshold. Benefits such as SSI are needs-based and the government has set strict asset limits for individuals to receive benefit checks. However, because government benefits only cover the very basic necessities of a special needs person, it is common for families to want to provide additional financial resources for their loved one – but this must be done carefully so that their dependent does not lose access to benefits. A popular solution is setting up a special needs trust.

How Do Special Needs Trusts Work?

A special needs trust allows you to maintain the quality of life of a loved one with special needs without affecting their eligibility for government benefits. Assets placed in the trust are not counted, and the money should be used to cover living expenses other than food and shelter. It can also protect assets from creditors and gives you greater control over who inherits the trust after the beneficiary dies.

When setting up a special needs trust, you will name a trustee (a person who will manage the trust) and a beneficiary (the person receiving assistance). Special needs trusts are usually irrevocable, meaning they cannot be easily changed or terminated, and any assets transferred into the trust will be owned by the trust.

You may fund the trust with a wide variety of assets, keeping in mind that the goal of the trust is to provide financial means for the beneficiary to live a comfortable life. The two most common types of special needs trusts are First-Party Trusts (funded with assets belonging to the trust beneficiary) and Third-Party Trusts (funded by third-party assets such as those of a parent).

Does a Special Needs Trust Protect Assets From Medi-Cal Estate Recovery?

Recent updates in the law have made it easier for Medi-Cal beneficiaries to protect their assets from Medi-Cal estate recovery after their death. If a loved one with special needs received Medi-Cal benefits during their lifetime, the California Department of Healthcare Services may attempt to seek repayment from the beneficiary’s estate, which usually means a hefty bill.

Fortunately, Medi-Cal may generally only go after the assets that are subject to probate. This means that any assets placed in a living trust – including a special needs trust – will likely not be reached by Medi-Cal. There are a few exceptions to this rule, so it is always best to consult your attorney. If you anticipate your loved one may be subject to Medi-Cal estate recovery, start planning early and ask your attorney if a special needs trust is right for your family.

How Can a Special Needs Planning Attorney Help?

The rules and regulations governing issues such as benefit eligibility for disabled or special needs persons and Medi-Cal estate recovery can be confusing and overwhelming. At Barilari & Williams, LLP, we help our clients take the right steps to protect the future of their loved ones with special needs. Reach out to our Pasadena office at 888-EST-PLAN to see how we can help you.