California Document Preparers Creates Special Needs Trusts

California Document Preparers Creates Special Needs Trusts

California Document Preparers helps our clients create Living Trust packages that include a Will, Power of Attorney, Advance Healthcare Directive, and other important supporting documents. Many of our clients comment on how comprehensive our package is—it includes a section to list healthcare providers, accountants, insurance carriers and financial advisers as well as medications and logins to digital accounts. We encourage people to think carefully about what information their children or loved ones would need if they were suddenly incapacitated so that care can continue seamlessly.

But what if one of your children or dependents has a disability, receiving Medi-Cal or Social Security?

If you want to leave money or property to a loved one with a disability, it’s important to plan ahead to avoid jeopardizing his/her Supplemental Security Income (SSI) and Medi-Cal benefits. Instead of leaving property directly to your loved one, you will need to set up a Special Needs Trust and leave property to your special needs beneficiary though this Trust.

Special Needs Trust requires a Trustee to administer it

Along with the Special Needs Trust, you will need to identify someone to serve as a Trustee; this person will have complete discretion over the Trust property and will be in charge of spending money on your loved one’s behalf. The Trustee can’t distribute money directly to your loved one, which could jeopardize SSI and Medi-Cal eligibility. Rather, the Trustee can spend the Trust’s assets to buy necessary products and services that contribute to quality of life, including personal care attendants, vacations, home furnishings, medical/dental expenses, education, recreation, vehicles and physical rehabilitation. Since your loved one will have no control over the money, SSI and Medi-Cal administrators will ignore the trust property for program eligibility purposes.

Finalizing and funding the Trust

During your lifetime, the Special Needs provisions are merely a section of your Revocable Living Trust, and it is only created upon your death.  Once that happens, the part of your estate that you allocated for your special needs beneficiary is segregated from the rest of your estate and held for the special needs beneficiary’s benefit. At that point, the trust will receive a tax ID number, and is funded through the portion of your estate you allocated for it. 

It can also be funded through other people’s Wills and Living Trusts, or through beneficiary designations and other estate planning tools. Virtually any type of property can be held in a Special Needs Trust, including real estate, stocks, collections, a business, patents or jewelry. But because the primary purpose of a special needs trust is to use money to pay for items that aren’t provided by SSI or Medi-Cal, Special Needs Trusts typically give the Trustee the authority to sell tangible items (cars or jewelry, for example) to raise cash.

The Special Needs Trust ends when it is no longer needed, generally at the beneficiary’s death or when the funds have been spent.

If you have questions about a Special Needs Living Trust or a standard Living Trust, visit or call one of our three Bay Area offices: Dublin, 925.479.9600; Oakland, 510.452.2320; or Walnut Creek, 925. 407.1010. We’re here to help.