Special Needs Trusts
for California Families.

What Is a Special Needs Trust?

Protecting your disabled loved one — now and after you're gone.

As a parent of a child with special needs, planning for their future is one of the most important things you will ever do. A well-planned Special Needs Trust (SNT) enables your child to meet their needs in the event something unexpected happens to you — while preserving the government benefits they depend on.

A Special Needs Trust is a legal document that provides for the control and distribution of assets held by a trustee for the benefit of a person with a disability. The assets can include money, stocks, bonds, real estate, business interests, or other property. The trust provides how those assets are managed during the beneficiary's life and distributed after their death.

The core problem SNTs solve

Individuals with disabilities who receive government benefits like SSI (Supplemental Security Income) or Medicaid face a critical vulnerability: when they receive money — whether from an inheritance, personal injury settlement, gift, or other source — their public benefits may be jeopardized or eliminated.

Once a disabled person has more than the asset limits in their own name, SSI and Medicaid can be reduced or terminated. A Special Needs Trust solves this by holding the assets outside the beneficiary's direct ownership while still making them available for the beneficiary's benefit.

What an SNT covers — and what it doesn't

Choosing and managing a trustee

The trustee manages the trust assets and makes distribution decisions. The trustee must not be the beneficiary themselves. Choosing the right trustee is one of the most critical decisions in setting up an SNT. The trustee must be:

• Familiar with the beneficiary's public benefits and their requirements (SSI, Medicaid, SSDI, Medicare)
• Knowledgeable about investment standards and trust recordkeeping requirements
• Aware of tax implications of trust distributions
• Able to identify what trust assets can and cannot be used for without jeopardizing benefits
• Someone you can trust to act in your loved one's best interests without oversight

Types of Special Needs Trusts

First-party (self-settled) SNT: Funded with the beneficiary's own assets — such as a personal injury settlement or inheritance received directly. Must be created by a parent, grandparent, legal guardian, or court. Requires Medicaid payback at the beneficiary's death.

Third-party SNT: Funded with assets belonging to someone other than the beneficiary — typically a parent's estate plan. No Medicaid payback required at death. This is the most common type set up through estate planning.

Pooled trust: Managed by a nonprofit organization, with individual accounts for each beneficiary. Can be an option for smaller amounts or as a co-trustee arrangement.

Protecting children — the Legally Protected Children's Package

If you have a special needs child and are setting up your estate plan, LAESQUIRE's advanced trust package includes a Legally Protected Children's package — which appoints both temporary and permanent guardians, medical power of attorney for the minor child, HIPAA authorization, instructions to permanent guardians and to babysitters, and emergency family cards.

Note: a will alone only appoints a permanent guardian — not a temporary one. Without a temporary guardian document, your children may be sent to child services during your incapacity, even if you have a will.