COULD A SUPPLEMENTAL NEEDS TRUST HELP YOUR LOVED ONE?
Disabled Californians rely on public benefits payments to support them in their daily lives. Receiving a large sum of money as an inheritance, however, can put those benefits at risk. In these cases, establishing a supplemental needs trust could give them the funding they need to
What is a supplemental needs trust?
A supplemental needs trust, often called a special needs trust, is a trust established to provide supplemental funds for those who receive government benefits. They can be established by a loved one through a third-party trust to provide additional support to a loved one, or they can be first-party trusts funded by the beneficiary themselves.
A trustee manages these trusts and distributes funds to the beneficiary based on the terms of the trust itself.
What are the benefits of a special needs trust?
One of the most important benefits of establishing a special needs trust is that it provides for those with special needs without impacting their eligibility for the government support they rely on. While many resources are exempt, the government only provides benefits to those with less than $2,000 in resources. This means that gifts and inheritance provided through a will could benefit them in the short term but may limit their benefits in the long run.
Because the assets in trust are owned by that trust and not the beneficiary, they will not interfere with the resources limits employed by the Social Security Administration. They can, however, benefit those with special needs by allowing them the additional income they need to improve their quality of life through schooling, travel and activities.