When your child has a significant disability that is expected to last into adulthood, it’s critical to plan for the future. This usually involves setting goals like deciding where they will live, applying for government benefits, and establishing a special needs trust. However, with all of the responsibilities that come with meeting your child’s advanced needs, it can be challenging to manage these tasks. In this situation, you will need to determine if your child’s special needs plan is in order.
If you have not considered government benefits but expect that your child will need this kind of support, now is an excellent time to look into the different available programs. Social Security Income (SSI) is available to individuals with a qualifying disability and can provide a small monthly amount. Medi-Cal, California’s Medicaid program, provides medical assistance to individuals with disabilities as well as others. Often SSI and Medi-Cal provide essential benefits to individuals with disabilities. However, both of these programs are income-sensitive, so it is crucial to plan with this fact in mind.
While SSI and Medi-Cal provide for some costs, they don’t usually pay for any additional expenses. One of the best ways to pay for some of the expenses that your child’s government benefits don’t cover is through a special needs trust.
A California special needs trust is a unique legal device that allows money to be used to pay for certain expenses without endangering the beneficiary’s government program eligibility. There are two types of special needs trusts, first-party and third-party trust. A first-party trust is one that is created with the beneficiary’s own funds or ones that are owed to him or her. A third-party trust is a trust that is created with funds that belong to someone other than the beneficiary and that are not owed to them. A significant difference is that with a first-party trust, the state is permitted to take the individual’s property to satisfy his or her debt to the Medi-Cal program when the beneficiary dies. With a third-party trust, the property would not be reachable because the trust assets do not belong to the beneficiary.
It’s important to note that special needs trusts have specific rules regarding allowable expenses. If payment is made for an invalid expense, the amount could be counted as income to the beneficiary and result in government benefit disqualification or a benefit reduction.
As you plan for your child’s long-term needs, you may be considering your estate plan and ways to leave your assets for his or her long-term care. However, if you leave your child’s inheritance incorrectly, the amount could disqualify them from receiving critical government benefits. Therefore, it’s vital that you work with an experienced California special needs trust and estate planning attorney when preparing for your child’s future.
At the Law Offices of Alice A. Salvo , we are special needs trust and estate planning attorneys with experience helping clients prepare for the future. Please contact us online or by phone to schedule an appointment today.