In many cases, people with disabilities are unable to earn much income. As a result, they qualify for need-based government benefit programs. Medi-Cal is a source of health insurance for people with financial need, and Supplemental Security Income can provide a basic level of financial support if you can qualify.
An improvement in financial status could result in a loss of need-based government benefit eligibility. As a response, assets can be protected through the creation of a special needs trust.
First Party Special Needs Trusts
A first party special needs trust is a special needs trust that is funded with assets that are the property of the beneficiary.
Someone may become disabled due to injuries sustained in an accident. An individual in this situation may eventually receive a personal injury settlement or judgment. To preserve government benefit eligibility, a grandparent, a parent, or a legal guardian could use the assets to fund a special needs trust.
The beneficiary could not directly control the assets in the trust. A trustee would handle the trust administration tasks. Under program rules, the trustee could use the assets in the trust to satisfy some of the beneficiary’s unmet needs. These expenditures would not impact benefit eligibility.
There is one downside that enters the picture when a first party special needs trust is created. After the death of the beneficiary, the Medi-Cal program would seek reimbursement from the beneficiary’s estate, so assets that remain in the trust may wind up in the state’s coffers.
Learn More About Special Needs Trusts
If you would like to obtain more detailed information about special needs trusts, we have a valuable resource that you can access through this website. Our firm has prepared an in-depth report on special needs trusts, and you can obtain your copy free of charge right now.
To get your copy of the report, visit this page and follow the simple instructions: Free Report on Special Needs Trusts.
Take Direct Action
Medi-Cal and Supplemental Security Income are very important to many people with disabilities. The program rules are complex, and the proper way to proceed will vary on a case-by-case basis.
We looked at first party special needs trusts in this post, but it is also possible to fund a special needs trust for the benefit of someone else. The assets do not have to be the property of the beneficiary.
If you would like to discuss special needs planning with an experienced special needs planning attorney, we would be glad to assist you. Our firm offers consultations, and we can answer your questions and help you create a special needs trust if you decide to go forward.
To set up an appointment, send us a message through our contact page: Sacramento CA Special Needs Planning.
Latest posts by Timothy P. Murphy (see all)
- Important Estate Planning Tools for the LGBTQ Community - December 11, 2019
- Don’t Accidently Disinherit Your Children - December 9, 2019
- Your Estate Plan: Get It Into a Writing or Else - December 7, 2019