Understanding Special Needs Trusts in California

February 19, 2025

Understanding Special Needs Trusts in California

A Special Needs Trust (SNT) is a valuable estate planning tool designed to provide financial support for individuals with disabilities without jeopardizing their eligibility for government benefits such as Supplemental Security Income (SSI) and Medi-Cal. These trusts allow loved ones to set aside assets to enhance the quality of life for a beneficiary while ensuring continued access to essential public assistance.


How a Special Needs Trust Works


An SNT holds assets on behalf of a beneficiary with special needs and is managed by a trustee. The funds in the trust can be used for various expenses, including medical care, therapy, education, and recreation, as long as they do not interfere with benefit eligibility. There are two primary types of special needs trusts:

  1. First-Party Special Needs Trust – Funded with assets that belong to the person with a disability, such as an inheritance or legal settlement. These trusts are subject to Medicaid payback provisions, meaning any remaining funds may be used to reimburse the state for benefits received.
  2. Third-Party Special Needs Trust – Created and funded by family members or loved ones. Unlike a first-party trust, there is no requirement to repay Medicaid, making this option ideal for long-term planning.


The Benefits of a Special Needs Trust



A properly structured SNT ensures that a disabled individual receives financial support while maintaining government benefits. It can cover costs for:

  • Personal care attendants
  • Medical treatments not covered by insurance
  • Travel and entertainment
  • Educational programs and training
  • Assistive technology and home modifications

Because funds are managed by a trustee, beneficiaries are protected from financial exploitation and mismanagement.


Establishing a Special Needs Trust in California


Creating a special needs trust requires careful planning to comply with California and federal laws. At Anyama Law Firm, we assist families in structuring SNTs to provide long-term security for their loved ones. We guide clients through the trust formation process, ensuring it aligns with their estate planning goals while protecting eligibility for government programs.

If you are considering a special needs trust for a loved one, consulting an experienced attorney can help ensure compliance with legal requirements and maximize benefits. Contact Anyama Law Firm to learn how we can assist you in securing a stable future for your family member with special needs.

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