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What Does A California Special Needs Trust Allow?

12/22/2022 | Special Needs Trust
What Does A California Special Needs Trust Allow

For a California resident living on benefits public assistance programs such as Medi-Cal (California Medicaid) and Social Security Income (SSI), there is usually little to no money left at the end of the month after covering basic expenses. Fortunately, someone in this situation who has a California special needs trust can supplement their benefits without losing their eligibility. However, there are limits on how California special needs trust payments may be used.

Special Needs Trust Supplement

The idea behind a California special needs trust is for trust payments to supplement but not a replace the funds provided by government benefit programs. The trust will be administered by a trustee who is responsible for making sure the funds are distributed to be spent according to the rules. If the trustee misuses the funds or pays them directly to the beneficiary, they could be counted as income for the recipient. This is important because having too much income could disqualify the beneficiary from their government program eligibility. Further, it can take considerable time to re-establish eligibility. In the meantime, your loved one could be subjected to medical and other expenses which they can’t afford. Without substantial resources, which most people in this situation do not have, the consequences could be devastating.

Permissible Expenses and Income

Depending on its structure, you can use a special needs trust to pay for most expenses. However, it is not generally a good idea to give the beneficiary money directly or to use the disbursements to pay for food or shelter. This is because if SSI and Medi-Cal view the trust payments as income for the beneficiary, he or she could be viewed as having earned too much money and then be disqualified or experience a reduction in his or her benefits. This goes back to the concept of the supplemental nature of the trust. Purchases such as household goods or electronics, furniture, additional medical or rehabilitative treatments which are not covered by Medi-Cal, travel expenses, and recreational activities tend to be safer as they are usually consider permissible.

Contact a Special Needs Trust Attorney

The best way to ensure that your California special needs trust is created in a manner which can support your loved one’s needs without interfering with his or her benefits is to consult with an experienced California special needs trust attorney who understands the issues and laws in this area. By having the right advice, you can avoid making costly mistakes which deprive your loved one of the support they need.

California special needs trust can be an essential part of making sure your loved one has the best quality of life possible. With the right planning and direction, your loved one’s trust can support their care today and in the future. At the Law Offices of Alice A. Salvo, we understand the intricacies of California special needs trust planning and have the experience you need. Contact us today to schedule your free consultation.