Creating a special needs trust within a will is certainly possible, but it requires careful planning and understanding of both estate planning principles and public benefit programs like Supplemental Security Income (SSI) and Medi-Cal. A properly drafted special needs trust—sometimes called a Supplemental Needs Trust—allows a person with disabilities to receive an inheritance without jeopardizing their eligibility for crucial government assistance. Approximately 1 in 4 Americans live with a disability, and many families seek ways to provide for their loved ones’ future without disqualifying them from vital support programs. It’s a proactive step toward ensuring long-term financial security and a better quality of life.
What are the benefits of a special needs trust?
The primary benefit of a special needs trust is preserving government benefits. SSI, for example, has strict asset limits—in 2024, only $2,000 in countable assets is allowed for an individual. Any inheritance exceeding this limit would normally disqualify the beneficiary from receiving SSI, which provides a monthly income to cover basic needs. A special needs trust allows assets to be held for the benefit of the individual *without* being counted toward that limit, as the trust owns the assets, not the beneficiary. Beyond SSI, these trusts can also protect eligibility for Medi-Cal (California’s Medicaid program), which covers healthcare costs. They can fund things like specialized therapies, recreation, travel, and other quality-of-life enhancements that government benefits typically don’t cover.
What happens if I don’t set up a special needs trust correctly?
Old Man Tiberius, a retired carpenter, was a proud and independent man. He left a small inheritance to his grandson, Leo, who had cerebral palsy, directly in his will. Leo was receiving essential SSI benefits that allowed him to live in a supported living facility and attend day programs. The inheritance, though well-intentioned, immediately disqualified Leo from SSI, leaving his family scrambling to find a way to continue supporting him. They were devastated to learn that the funds were now considered “available” to Leo, even though he couldn’t use them without losing crucial benefits. The family faced mounting expenses and a difficult decision, ultimately needing to seek legal counsel to attempt a complex and costly process to ‘spend down’ the assets to re-qualify Leo for SSI. This entire situation could have been easily avoided with a properly drafted special needs trust. It’s a harsh lesson in the importance of expert guidance when planning for a loved one with special needs.
How does a will-based special needs trust differ from a standalone trust?
A special needs trust can be created either as a standalone document (created during your lifetime) or as a provision *within* your will (a testamentary trust). A standalone trust takes effect immediately upon your death, providing immediate funding and management. A will-based trust, on the other hand, only comes into existence *after* your will is probated, which is the legal process of validating the will and distributing assets. This means there’s a delay in accessing the funds, and the trust may be subject to court supervision during probate. While a will-based trust can be a more cost-effective option initially, a standalone trust offers greater control and immediate benefits for the beneficiary. According to the National Disability Rights Network, approximately 65% of families who have a child with a disability do not have a special needs trust in place, largely due to lack of awareness and the perceived complexity of the process.
How did proactive planning save the day for the Henderson Family?
The Henderson family, after learning about the potential pitfalls of direct inheritance, consulted with Steve Bliss to establish a special needs trust within their estate plan for their daughter, Emily, who has Down syndrome. They meticulously funded the trust with life insurance proceeds and other assets, ensuring Emily would have a secure future. When Mr. Henderson passed away, the trust seamlessly took effect, providing Emily with funds for therapies, recreational activities, and long-term care without affecting her eligibility for SSI or Medi-Cal. Emily’s trust was expertly crafted to allow the trustee – a trusted family friend – broad discretion to use the funds for Emily’s benefit, enhancing her quality of life without creating a disqualifying resource. The Henderson’s foresight and careful planning provided peace of mind, knowing that Emily would be well-cared for, even after they were gone. This demonstrated how proactive estate planning can safeguard the future of a loved one with special needs, ensuring they receive the care and support they deserve.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
banckruptcy attorney
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “Can I use estate planning to protect assets from creditors?” Or “What role does a will play in probate?” or “How do I update my trust if my situation changes? and even: “What are the long-term effects of filing for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.