Special Needs Trusts

Both Federal and California government assistance programs exist to benefit individuals who have a “certified” disability. A variety of tests exist to determine if or when a person’s disability has been “certified.” In many cases, an individual’s ability to receive governmental benefits is limited, because the applicant has either too much income and/or owns assets with a total value higher than the very small allowed amount.

The asset “maximum” can often be as low as $2,000 or $3,000. If an individual can qualify for assistance, that beneficiary can receive funds from the governmental agency on a monthly basis to provide a modest level of living needs.

In certain situations, an individual who otherwise qualifies for governmental benefits, can also receive the benefit of non-governmental funds and continue to receive payments from one or more governmental entities. This can be done with the use of a Special Needs Trust (“SNT”). The Palm Desert special needs trust lawyers Sanger & Molever can provide valuable SNT guidance.

With a properly drafted SNT, the certified disabled individual can continue to receive governmental benefits and receive funds to supplement what the government provides.

The Palm Desert special needs trust lawyers Sanger & Molever firm can explain the types of SNT. Two basic types of SNTs exist; first-party SNTs and third-party SNTs. First-party SNTs, sometimes called (d)(4)(A) SNTs, hold assets of the beneficiary, or assets to which the beneficiary is legally entitled. Examples include somebody with significant assets earned or inherited, and somebody who receives assets through a settlement or a court decision. The second type of SNT is a “third party SNT”. Third-party SNTs hold assets that belonged to any third person and never were owned by the beneficiary.

One critical difference between the first-party SNT and the third-party SNT arises when the beneficiary dies. With a first-party SNT, the Department of Health Care Services (“DHCS”) must be named as the primary beneficiary so it can “recover” amounts that the government paid to the SNT beneficiary up to the total of the remaining SNT assets. Under current law, third-party SNTs do NOT require any payback to the government, because the SNT assets never belonged to the SNT beneficiary. Because politicians can change the third-party payback rule with the stroke of a pen, sometimes a prudent decision involves establishing an irrevocable third-party SNT now – and “grandfathering” that SNT before a law change makes the SNT less beneficial to the client and the client’s family.

If you have a possible SNT situation, you should consult with the experienced lawyers Sanger & Molever firm.