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What should I know about first-party special needs trusts?

Like many other California residents, you understand that it is important to have your estate planning in order for the benefit of your loved ones. However, what about taking charge of your own medical and financial needs if you become disabled? If you are unable to work due to a permanent disability, you may need to rely on Medicaid and other forms of government assistance, but your assets may prevent you from being eligible.

This does not necessarily mean you need to get rid of your assets. You may still be eligible for benefits if you fund a special needs trust with your estate. As the National Law Review explains, special needs trusts take care of the health care and financial interests of disabled people while letting them remain eligible for government benefits.

First-party special needs trusts differ from traditional special needs trusts. With a first-party trust, you can set up the trust and its terms yourself, provided your disability does not affect your cognitive abilities. For example, you would not be considered mentally disabled after a car accident that left you permanently wheelchair-bound. Before a law that passed in December 2016, all special needs trusts were set up by disabled people’s parents, grandparents, legal guardians or the court – which could understandably be demeaning and humiliating for those who were not mentally incapacitated.

It is necessary to seek experienced legal counsel when you are considering setting up a special needs trust. Therefore, this information is not intended as legal advice.

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