Special Needs Trusts | Estate Planning Attorneys in Roseville, CA

What Is a Special Needs Trust?

A special needs trust (SNT) — also called a supplemental needs trust — is a specialized legal arrangement designed to hold assets for the benefit of a person with a physical or mental disability without disqualifying them from need-based government assistance programs such as Supplemental Security Income (SSI) and Medi-Cal (California's Medicaid program).

If assets are left directly to a person who receives these benefits, it can disrupt or eliminate their eligibility. A properly drafted special needs trust allows those assets to be used to supplement — not replace — government benefits, funding things like education, recreation, therapies, personal care, and quality-of-life needs that government programs do not cover.

Types of Special Needs Trusts in California

There are several types of special needs trusts recognized under California law:

• Third-Party Special Needs Trust:: Funded with assets belonging to someone other than the beneficiary — typically a parent, grandparent, or other family member. This is the most common type used in estate planning for a loved one with disabilities. Remaining funds at the beneficiary's death pass to other heirs and are not subject to Medi-Cal reimbursement claims.

• First-Party (Self-Settled) Special Needs Trust:: Funded with assets belonging to the person with disabilities, often arising from a personal injury settlement or inheritance received directly. California law requires a Medi-Cal payback provision upon the beneficiary's death.

• Pooled Special Needs Trust:: Managed by a nonprofit organization that pools assets from multiple beneficiaries for investment purposes while maintaining separate accounts for each individual.

Why Careful Drafting Is Essential

A special needs trust must be drafted with precision. Errors in language can inadvertently make distributions countable as income, jeopardizing benefits. The trustee must also understand the rules governing permissible distributions. Our attorneys work with families to draft trusts that are both legally compliant and practical for long-term administration.

Integrating a Special Needs Trust Into Your Overall Estate Plan

For parents and grandparents planning for a child or grandchild with disabilities, a special needs trust should be coordinated with your will, living trust, life insurance beneficiary designations, and retirement account designations. We help you build a cohesive plan that protects your loved one across every aspect of your estate.