Special Needs Trusts

Sometimes a generous gift can have unintended consequences. A special needs trust protects against the loss of eligibility for government benefits when a loved one receives an inheritance gift that pushes their “countable” “resources” over the eligibility threshold (i.e., the gift makes them too wealthy for government assistance). The law recognizes that special needs trusts are a supplement to, not a substitute for, government aid programs such as SSI and Medi-Cal. Property placed into a special needs trust (by gift or by transfer from inside of a living trust) will be available to meet ancillary needs of a loved one who continues to receive a public benefit program. Strict requirements must be met and careful drafting is required for a special needs trust to be effective.