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At What Age Is A Special Needs Trust Required?

12/21/2022 | Special Needs Trust
At What Age Is A Special Needs Trust Required

When someone has a significant disability, which prevents them from supporting themselves, they will probably have to rely on government benefit programs such as California Medicaid (Medi-Cal) and Social Security Income (SSI).  While programs provide the recipient with essential medical coverage and a small amount of money, they rarely cover their true cost of living.  Medi-Cal and SSI are income-sensitive meaning that to qualify for coverage, the recipient is generally not allowed to have more than $2000 in personal assets. However, in most cases, a person in this position is going to need something to supplement these benefits.  A California special needs trust can be a valuable resource in this situation.  For those planning, the question may come up:  At what age is a special needs trust required?

California Special Needs Trusts

A California special needs trust is a legal device where assets and funds can be placed for the benefit of a named beneficiary who has a qualifying disability without endangering his or her benefits.  Trust payments can be made for a broad range of expenses, and a trustee will manage the trust.  For someone dependent on Medi-Cal and SSI, a California special needs trust can make a significant difference in their quality of life.

At What Age is a Special Needs Trust Required?

While a special needs trust can be an excellent way to supplement your loved one’s income and expenses, these funding sources are not required.  However, if you anticipate your loved one will rely on government benefits, having this resource in place sooner rather than later is a good idea.

There are two types of special needs trusts: First-Party and Third-Party. A first-party special needs trust is funded with assets which belong to the beneficiary or to which he or she is entitled.  The funding source could be something like the individual’s money, an inheritance, or an insurance settlement amount.  However, this type of California special needs trust must be established before the disabled individual reaches age 65.

Someone other than the trust beneficiary funds a third-party special needs trust.  The trust funds can be placed in the trust while the third-party is alive or upon his or her death.  The funding source must be comprised of assets or money which the recipient never owned or had a right to own.  There is no age limitation for a third-party trust.

Although California special needs trusts are not required, they can be vital to your loved one having what they need to live comfortably.  However, it is critical that the trust is drafted correctly and created in a way which protects your loved one’s benefits.  Otherwise, this well-intended device could end up harming the person it was supposed to help.

At the Law Offices of Alice  A. Salvo, we have the experience needed to plan for your loved one’s present and future care.  Please contact us online or by phone to set up a free consultation. We are here to help, answer any question about a special needs trust and provide a beneficial solution for your family.