The trust concept dates back to Greek and Roman laws. It is the idea of entrusting ownership of property to another who is to manage the property for the benefit of the one entrusting it. In modern times, trusts are used so that the owner of the property can enjoy the benefits (or allow others to enjoy the benefits) without having to endure some of the burdens of ownership – like handling taxes or losing out on some other type of benefit. When it comes to qualifying for needs-based disability benefits, using a special needs trust allows a disabled person to have access to additional resources while not risking the loss of other available benefits.
The Law Office of Andrew Cohen knows that managing a disability can be challenging. Our Woodland Hills special needs trust attorney helps clients and their families create a plan to provide extra support without jeopardizing available government benefits.
Who Should Have a Special Needs Trust
People use special needs trusts when they have too much money or property to qualify for income-based government benefits. The trust is the ‘owner’ of the property even though the person receiving the government assistance is getting the financial benefits from the trust.
In California, the needs-based healthcare system is called Medi-Cal. There are two components to qualifying for Medi-Cal benefits. One is a condition requirement. And the other is an income requirement. Being disabled meets the condition requirement. The income requirement limits the amount of allowable income based on the number of people in a household.
Jane is 26. Two years ago, Jane was involved in a serious motor vehicle accident with a semi-truck on the Ventura Freeway. The truck driver had fallen asleep at the wheel, crossed the median, and hit Jane’s car head-on. Jane suffered extensive injuries including a severe traumatic brain injury. She is permanently disabled and unable to work. Jane has been receiving government disability benefits including Medi-Cal as she will need ongoing medical treatment. Her lawsuit is expected to settle soon and Jane will likely get quite a large sum from the trucking company. The money coming to Jane will cause her to be disqualified for Medi-Cal benefits and her medical expenses are very high.
A first-party special needs trust is funded with a beneficiary’s own property and can be set up to receive the proceeds from a personal injury settlement. The money in the trust can then be used to provide additional benefits to the injured person while not be counted as disqualifying income. The trust can provide financial benefits throughout the life of the beneficiary.
What Happens to Special Needs Trust Assets After the Beneficiary Dies
What happens with the property left in the trust after the beneficiary dies depends on the source of the property and a few other factors. A special needs trust funded with property that belonged to the beneficiary will need to have a ‘payback’ provision. If certain conditions are not met, the trust will have to pay back amounts received from the government – but only to the extent of the property left in the trust. A special needs trust that is funded with property from persons other than the beneficiary – known as a third-party special needs trust – does not have any obligation to pay back the government and the remaining property can go to anyone.
A special needs trust can help make sure that persons who need government benefits are able to receive all available resources to assist in their care and support. A Woodland Hills special needs trust lawyer at the Law Offices of Andrew Cohen will work with you or a loved one to determine if a special needs trust will maximize your available benefits and how to best plan for the distribution of any remaining trust assets. To discuss your particular circumstances, contact us by clicking here for a free consultation or call our office at 661-481-0100.
