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Beginners guide to special needs trust in California

On Behalf of | Jun 13, 2023 | Trusts

Families who have children with special needs must take extra precautions when planning their financial future. One of the most important tools to use in California is a Special Needs Trust (SNT). These trusts provide additional protection for those with disabilities, allowing them to access government benefits while providing supplemental funds from other sources.

Special needs trust defined

A special needs trust is a legal vehicle in California used to hold assets that are specifically designated for use in the care and support of a person with special needs. It allows family members, friends, or charities to contribute funds that the beneficiary will use to supplement government aid.

It works by allowing a trustee to control and manage the funds. So when the government determines an individual’s eligibility for benefits, they will not consider funds held in the trust.

Creating a special needs trust in California

Special estate planning needs a competent, experienced and credible trustee to ensure that all aspects of the trust are properly managed and in line with federal and state laws. Parents can remain involved either as advisors or co-trustees.

The creator of the trust (grantor) should write a letter of intent describing the needs and preferences of the beneficiary, as well as the financial goals for the trust. They should also appoint a successor trustee who will assume control of the trust if the original trustee dies or becomes incapacitated.

Funding the trust

The most typical ways to fund these trusts would be through gifts from family members or friends, life insurance policies, inheritances or settlements paid by third parties liable for causing injury to the beneficiary. If the beneficiary were to fund their own SNT, they should do so ten years before filing for government benefits.

A Special Needs Trust is an invaluable tool for parents seeking additional financial support for their children with special needs. With careful planning and knowledgeable trustees, families can customize a plan that meets the needs of their loved ones, both now and in the future.


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