If your loved one is currently receiving governmental benefits or if your loved one ever expects to receive governmental benefits, you need to plan ahead. If a special needs person who is receiving Supplemental Security Income (SSI) or Medi-Cal, both of which have asset and income based requirements, there is a good chance those benefits will be reduced if not eliminated if they receive an inheritance. It is possible to receive both government benefits and an inheritance if you leave an inheritance to your loved one in a special needs trust.
If you have an existing special needs provision in your current living trust, you should have it reviewed. Funds from special needs trusts are to be used to supplement your loved one’s needs but the funds are not to supplant government benefits. Older trust provisions prohibited a Trustee from making any distribution that would diminish government benefits. This language is very limiting. More commonly today, we realize that some expenses may be worth paying for from the special needs trust even if the governmental benefits will be reduced. Often times there is sufficient money in the special needs trust to give your loved one a better life than governmental benefits will provide. Current provisions allow a Trustee greater discretion to determine how the funds should be spent, which arguably is more beneficial than the limiting terms of special needs trusts in years prior. Have your special needs trust reviewed to make sure your Trustee has the discretion to take the best care of your loved one.
