Special Needs Trusts

Special Needs Trusts - Law Offices of Attorney Cheryl Walsh in Orange County, CASpecial needs trusts (also known as “supplemental needs” trusts) allow a disabled beneficiary to receive gifts, lawsuit settlements, or other funds without losing eligibility for “needs based” government programs. The trusts are drafted so that the funds will not be considered available to the beneficiary when determining eligibility for public benefits.

Special needs trusts are designed to pay for comforts and luxuries that are not paid for by public assistance funds. They are not used for basic support. These trusts typically pay for goods and services such as education, recreation, counseling, and medical attention but cannot be used to pay for necessities of life. (However, if the trust is drafted to allow it, the trustee can use trust funds for food, clothing, and shelter if the trustee decides doing so is in the beneficiary’s best interest despite a possible loss or reduction in public assistance.) Special needs can include medical and dental expenses, annual independent check-ups, transportation such as automobiles or vans, necessary equipment, training and education, insurance, and essential dietary needs or supplements. The trust can also be used to pay for electronic equipment and appliances, computers, vacations, movies, companion services, and other items to improve the quality of life of the disabled beneficiary.

Some types of Special needs trusts can be created by a parent or other family member using their own assets (also known as a “third party trust”) for the benefit of a person with special needs. Such trusts may be set up directly or through a will. In addition, the disabled individual can create the trust using their own assets, depending on the program for which he or she seeks benefits. These “self-settled” or “first-party” trusts are frequently established by individuals who become disabled as a result of an accident or medical malpractice and who later receive the proceeds of a personal injury award or settlement. If created for a disabled individual who is under the age of 65, these “first-party” trusts must be created by a parent, grand-parent, conservator or guardian or subject to a court order to maintain government benefits.