PERSONAL INJURY SETTLEMENT INHERITANCE & SPECIAL NEEDS TRUSTS
Feb. 21, 2022
You or a loved one is suffering from a disabling condition, and you’re receiving benefits from Medi-Cal and or Supplemental Security Income (SSI). Both of these programs place severe limits on the number of assets you can have in your name – specifically, $2,000 for an individual.
Granted, you are allowed deductions for your home and a vehicle, among other basic living essentials. But if you somehow go over $2,000, your eligibility for these two programs – which provide medical care, food, and shelter expenses – can be jeopardized.
What if an automobile accident or other type of event that caused your condition suddenly results in a cash settlement or jury reward? Will you lose the benefits upon which you depend?
You can, but there is a perfectly legal option that can prevent the loss of Medi-Cal or SSI benefits while still allowing you to use the new funds for purposes other than those provided by your government programs. This option is called a first-party special needs trust (SNT).
To learn more about a first-party SNT or establish one, contact The Elder & Disability Law Firm, APC.
The attorneys at The Elder & Disability Law Firm, APC, have been helping individuals and their families with their disability concerns for more than two decades and will be happy to help you. From our office in Redlands, California, the attorneys proudly serve clients throughout neighboring communities, including Rancho Cucamonga, Riverside, and Palm Springs, California.
HOW A FIRST-PARTY SPECIAL NEEDS TRUST WORKS
Federal law provides for two basic forms of special needs trusts (SNTs) to help individuals avert the trigger mechanism – namely, too many assets – that can cause a needy recipient to lose his or her access to Medi-Cal, SSI, and other programs such as HUD housing assistance and In-Home Support Services (IHSS).
A third-party special needs trust is generally established by the disabled person’s family using their own assets. The beneficiary, a disabled individual, cannot contribute assets to a third-party fund. The beneficiary, however, can contribute to a first-party SNT but must use only their own assets in doing so.
A first-party SNT is a key to preventing losing Medi-Cal and SSI benefits if you, the disabled person, suddenly win a personal injury settlement or jury award or receive an inheritance; however, you must be under the age of 65. The funds can be placed in the SNT under the direction of an independent trustee. You have no control over the assets in the trust; only the trustee does.
The trustee, who might be a relative, friend, or even a financial institution, can disburse funds as needed to cover expenses not provided for by Medi-Cal or SSI – name, anything other than basic medical care, food, and housing.
The funds can be employed for treatments or rehabilitative services not covered by Medi-Cal and also for the other needs of daily living besides direct food and housing assistance. These necessities can include housekeeping, gardening, cooking, computers, cell phones, pet care, and professional services such as legal and accounting.
The major difference between a third-party and a first-party special needs trust, however, is what happens to the remaining assets when the beneficiary dies. A third-party SNT can designate an alternative beneficiary to receive assets remaining after the primary beneficiary is gone. For a third-party SNT, the remaining funds must go toward repayment for services rendered.
HOW LEGAL COUNSEL CAN HELP
The rules for establishing a special needs trust can be tricky, and creating one is not a simple download-a-form process. You need the help of an experienced special needs trust attorney to clear all the legal hurdles to prevent any jeopardy to the beneficiary’s benefits.
The attorneys at The Elder & Disability Law Firm, APC, are dedicated to helping those with disabilities – or those whose loved ones are facing disability – take full advantage of the resources available to them. They can work with you to create a special needs trust to provide supplemental assistance for yourself or a loved one while receiving Medi-Cal and other benefits.
Contact the firm today. The Elder & Disability Law Firm, APC proudly serves clients in Redlands, California, including Riverside, Palm Springs, and Rancho Cucamonga.