losr Special Needs Trust


Special Needs Trusts may be useful for a person who meets all these criteria:

  • Physically or mentally disabled
  • Receiving or might receive needs-based public benefits such as Supplemental Security Income (SSI) or Medi-Cal
  • Expected to receive assets that will disqualify him or her from SSI or Medi-Cal

Following are some commonly asked questions and answers about Special Needs Trusts:

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reader of my article Special Needs Trusts Fundamentals inquired about using a Special Needs Trust (SNT) to supplement a parent’s Medicaid, while avoiding having to reimburse the state for those payments at the parent’s death. Of course, its beyond the scope of this web site to offer legal advice specific to anyone’s personal situation, but there are issues here I’d like to address.

Let’s presume that you are anticipating a parent will be entering a skilled nursing facility and wants the Medicaid program to pay the cost of that care. In California, where I practice, the Medicaid program is called “Medi-Cal” and it is the Medi-Cal program that I will be talking about.

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  Special Needs Trust, sometimes called a supplemental needs trust, is a trust that is created and designed to hold property of beneficiaries who are disabled or mentally ill so they can enjoy the use of the property and still qualify for needs-based public benefits. Supplemental Security Income (SSI) and Medicaid (which in California is called “Medi-Cal”) are the more common needs-based public benefits which Special Needs Trusts are created to protect.

A key to maintaining eligibility for needs-based public benefits is that the beneficiary cannot have control over the assets in the Special Needs Trust (SNT). The beneficiary cannot manage the assets, has no right to demand receipt of income or property from the SNT, and has no power to name the manager of the trust (known as the trustee) or to change the terms. The use of the SNT’s assets for the benefit of the beneficiary is determined at the discretion of the trustee of the SNT. The trustee can be a family member, friend, or private professional trustee.

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