Orange County Special Need & Supplemental Trust Planning

If you have a child with a physical or mental disability who will not be completely independent as an adult, special planning will provide him or her with maximum protection after you’re gone. At Morgan Law Group, our special needs lawyers for estate planning in Orange County are dedicated to ensuring that your child with special needs will be well taken care of when you are no longer able to serve as his or her primary caregiver. We offer a variety of estate planning tools and strategies designed to accommodate the unique circumstances presented by children with special needs and their families.

How a Special Needs Trust Attorney Can Help

Estate planning for a child with special needs comes with a complex set of financial, social, and medical issues that some lawyers are ill-equipped to handle. At Morgan Law Group, however, our experienced legal professionals will use our experience and knowledge of the law to develop a comprehensive special needs estate plan to ensure that:

Your child will always be in the care of people you want;
Any money left behind will pass in a way that preserves your child’s eligibility for government benefits;
A future transition will be as easy as possible for your loved ones, and they will have a trusted family attorney to turn to, should something unexpected happen to you; and
Your child will receive the best care possible for the rest of his or her life.

In addition, our experienced lawyers will review your plan periodically to take into account any changes in your financial, family, or medical situation.

Future care planning is often a difficult step to take, but we will walk you through it one step at a time, doing all we can to make the process as easy as possible for you and your family.

An Overview of Special Needs Planning

Special needs planning does what a will cannot: it provides you with a way to take care of your disabled child’s needs without disrupting his or her eligibility for government benefits. Below are some key aspects of the special needs planning process.

As discussed in detail below, special needs planning usually involves the creation of a special needs trust. A special needs trust provides a way for you to leave assets to a child with special needs without disrupting his or her eligibility for government benefits. The trust should be structured in a way that provides a level of separation between your loved one’s finances and the funds in the trust. This typically involves the inclusion of trust provisions that declare that the trust cannot be used to pay for your child’s needs that are already covered by government benefits.
When establishing a special needs trust, you must choose a trustee. The trustee you choose will be responsible for managing the funds in the trust and ensuring that such funds are used to benefit your disabled family member in a way that does not jeopardize his or her eligibility for government benefits.
Special needs planning should be undertaken as part of a comprehensive estate planning effort, as you will require a broad plan that ensures you have the funds necessary to create your loved one’s special needs trust. Your estate plan should facilitate the asset growth and accumulation necessary to adequately fund your child’s special needs trust.

Reasons for Special Needs Planning

Special needs planning focuses on providing for your disabled child when you are no longer there to do so. As the parent of a child with special needs, you must make careful estate planning choices to coordinate all of your child’s legal, financial, and special care needs. Common reasons for special needs planning include:

Your child will need help after you’re gone: If your child is unable to care for himself or herself due to a disability of some kind, you need to take steps now to ensure that he or she will be cared for even after you’re gone. The best way to do this is through the special needs planning process.

Money management: People with special needs often have trouble making decisions regarding financial matters, including money management, budgeting, and planning for the future. Although you could simply leave a lump sum of money to your disabled loved one, this may not be the best option for your disabled child. Through the special needs planning process, however, you can ensure that your child’s financial needs are met in a manner that provides him or her with the maximum amount of protection while preserving his or her eligibility for government benefits.

Protection of your child’s inheritance: Special needs planning can help protect your child’s inheritance without interfering with his or her eligibility for government benefits. When you establish a special needs trust for your child, the trustee you select will abide by the terms of the trust to ensure that your child receives his or her inheritance and any benefits to which he or she is entitled.

Special Needs Trusts

The creation of a special needs trust is a key part of the special needs planning process. As noted above, a special needs trust is a great way to give your child indirect access to a fund that can provide for his or her supplemental monetary needs without jeopardizing his or her eligibility for government benefits. Although there are a number of different types of special needs trusts to choose from, the two most common in California are first-party special needs trusts and third-party special needs trusts.

A first-party special needs trust is a trust funded with money owned by the disabled individual. First-party special needs trusts are “irrevocable,” which means that they generally can’t be changed, modified, or canceled. Upon the trust beneficiary’s death, the trustee must use any remaining assets in the trust to repay the state for benefits provided by the state to the beneficiary of the trust. Since a first-party special needs trust is funded by the beneficiary’s assets, this isn’t normally the best trust option for children, as they typically don’t possess the assets necessary to fund such a trust.

As opposed to a first-party special needs trust, a third-party special needs trust is funded with the assets of someone other than the beneficiary. This type of trust is the most common and effective way to provide for a child with a disability. A third-party trust can be established through a revocable living trust, stand-alone trust, or a will.

Although the concept behind special needs trusts may seem simple, their design and implementation can be extremely complicated. An improperly created special needs trust can jeopardize your child’s eligibility for public assistance. Therefore, we recommend that you contact a special needs trust lawyer for assistance with creating a special needs trust. An experienced special needs trust attorney will help design a special needs trust that addresses your child’s unique needs while preserving his or her eligibility for public benefits.

Conservatorship

People with mental or physical disabilities are often incapable of properly caring for themselves or making certain important decisions. However, unless you become your child’s conservator, the law will presume that your child is capable of doing such things when he or she turns 18. A conservator is a person appointed by the court to manage and arrange the financial affairs and daily needs of another due to mental or physical limitations. By filing a petition for conservatorship, you can continue to make personal and financial decisions on behalf of your child even after he or she becomes a legal adult. If you do not become your child’s legal conservator, however, you will no longer have the legal authority to make these important decisions.

In addition, there are alternatives to conservatorship that may be sufficient depending on your unique situation. For example, if your child is able to make certain decisions, he or she may be able to sign appropriate legal documents that give you the authority to make medical, legal, and financial decisions on his or her behalf. Not all adult children with a disability need a conservator.

During the special needs planning process, our experienced special needs lawyers will help you determine whether a conservatorship is appropriate for you and your child. If so, we will prepare all necessary documentation to ensure that you can continue making decisions on behalf of your child long after he or she reaches adulthood.

Contact a Special Needs Estate Planning Attorney

If you have a child with special needs, the bottom line is this: You must act to ensure that he or she is protected after you’re gone. The best way to ensure that your child will be cared for in the future is to contact an attorney for assistance. At Morgan Law Group, we are here to help you and your family develop a special needs plan that is as unique as you are. We understand the types of challenges that you and your family face, and we are here to help you address them. If you’re ready to begin the special needs planning process, please contact us to schedule a free initial consultation.

Frequently Asked Special Needs Planning Questions

How Can I Leave Money to a Child With Special Needs?

When leaving money to a child with special needs, one of the key considerations is ensuring that you don’t interfere with his or her eligibility for government benefits. The best way to leave money to a child with special needs is by creating a special needs trust. A special needs trust is an excellent way to provide your child with access to a fund that can provide for his or her needs without jeopardizing his or her government benefits eligibility. The two most common types of special needs trusts in California are first-party special needs trusts and third-party special needs trusts. The primary difference between these two types of trusts is how they are funded.A first-party special needs trust is funded using the beneficiary’s own money or assets. A third-party special needs trust, on the other hand, is funded using the assets of someone other than the beneficiary. Typically, a third-party special needs trust is used to provide for a child with a disability, as most children don’t possess assets of their own. Regardless of which type of trust is the best choice for you and your child, establishing a special needs trust is by far the best way to leave money to a child with special needs.
Does a Special Needs Trust Affect SSI?

A properly drafted special needs trust should not affect Supplemental Security Income (SSI) or Medicaid benefits. However, problems can develop when funds leave a special needs trust. Therefore, as we explain below, in order to avoid impacting SSI, a special needs trust should never give the beneficiary cash or pay for the beneficiary’s food or shelter. If an SSI beneficiary receives cash or a cash equivalent from a special needs trust, his or her benefits will be reduced by a dollar for each dollar received. Depending on how much money he or she receives, this could result in the total loss of SSI.

If a trust pays directly for a beneficiary’s food or shelter, the beneficiary could lose up to one-third of his or her SSI benefit. In addition, the payment of housing-related bills like real estate taxes, mortgage payments, condo fees, and utilities could result in a similar reduction in benefits.

With the exception of housing, cash, and food, a special needs trust can usually pay for most other things a beneficiary may need to supplement his or her lifestyle. However, the rules regarding special needs trusts and SSI are extremely complicated, so you should contact an attorney for guidance on these issues.
What Happens When the Beneficiary of a Special Needs Trust Dies?

When the beneficiary of a special needs trust passes away, the use of the remaining funds is determined based on whether the trust is a first-party special needs trust or a third-party special needs trust.With a first-party special needs trust, the remaining funds are used to repay any state Medicaid programs for benefits the beneficiary received during his or her lifetime, even if this completely exhausts the remaining special needs trust assets. In addition, estate taxes may be due depending on the amount remaining in the trust. If any funds remain after Medicaid has been reimbursed and taxes have been paid, the remaining funds will pass along to secondary beneficiaries.

With a third-party special needs trust, however, the remaining assets don’t have to be used to reimburse the state for Medicaid benefits received by the beneficiary during his or her lifetime, and no estate taxes are due. Thus, remaining funds in a third-party special needs trust pass along to secondary beneficiaries after the primary beneficiary’s death.
What Can the Funds in a Special Needs Trust Be Used For?
A special needs trust provides an individual with special needs with the funds necessary to enhance his or her quality of life while preserving his or her eligibility for public benefits. Government programs like SSI and Medicaid provide recipients with essentials, such as food, medical care, clothing, and shelter. Special needs trusts are intended to supplement—not replace—this support. Generally, special needs trusts can pay for things like recreation, education, counseling, and special medical needs that go beyond the necessities of life. Examples of the types of things a special needs trust might cover include:
- Medical and dental expenses not covered by benefits
- Special equipment, such as specially equipped vehicles and wheelchairs
- Therapy services
- Rehabilitation services
- Training
- Education
- Travel
- Recreation and entertainment
- Electronic equipment
- Appliances
- Insurance
- Companion payments
- Legal or guardianship expenses
- Burial costs
However, there are some things that a special needs trust should never pay for. As discussed above, a special needs trust should never provide an SSI or Medicaid beneficiary with cash or pay for food or shelter—this can place the beneficiary’s government benefits at risk. Once cash, housing, and food are removed from the equation, however, a special needs trust can pay for most other things a beneficiary needs to supplement his or her lifestyle.
Who Can Manage a Special Needs Trust?
One of the most important decisions to make when creating a special needs trust is determining who will serve as trustee. A trustee is an individual who manages the day-to-day operations of the trust, and his or her duties include making distributions to the beneficiary, paying the trust’s bills, and investing the trust’s assets–all while ensuring that the beneficiary retains his or her eligibility for public benefits programs.

In California, a trustee must be at least 18 years old and of sound mind. Beyond these requirements, virtually anyone can serve as a trustee. Often, the trustee of a special needs trust is the child’s parent, a relative, a trusted family friend, or a professional such as an attorney or accountant. Although the law isn’t very strict about who can serve as a trustee, it’s important to take several things into consideration when choosing a trustee. Ideally, a trustee should possess the following qualities:
- Familiarity with public benefit programs: In order to make sure your child’s eligibility for public benefits is never compromised, the trustee you choose should possess a knowledge of public benefit programs. Many government programs have very complicated and contradictory rules regarding special needs trusts. Therefore, your trustee must understand how to navigate these programs effectively. If a potential trustee doesn’t possess this type of knowledge, he or she may still be an option as long as an experienced attorney is available to provide the trustee with guidance.
- Availability: Serving as the trustee of a special needs trust can be very time-consuming. In fact, it can sometimes feel like a full-time job. Depending on the needs of the beneficiary, the trustee may spend a lot of time paying bills, helping to secure housing, monitoring government benefits, paying for medical care, and serving as the intermediary between the beneficiary and any number of service providers. If a trustee can’t make himself or herself available to perform these tasks, or if serving as trustee interferes with his or her family life or professional obligations, then another person may be a better fit for the role.
Trustworthiness: The trustee of a special needs trust is responsible for handling large sums of funds, and he or she is expected to do so in accordance with the trust’s requirements. Therefore, trustworthiness is one of the main qualities that a trustee must possess. If there are any questions about a person’s character, then he or she probably shouldn’t serve as trustee.

Get Started Today!

If you’re ready to begin planning for your child’s future, you need an experienced special needs trust lawyer on your side. At Morgan Law Group, our estate planning professionals are dedicated to ensuring that your child will be taken care of after you’re gone. We offer a variety of estate planning strategies and tools designed to accommodate your family’s unique needs. Please contact us today to schedule a consultation.