California Special Needs Trusts

If you have a special needs child or a spouse in a nursing home, our California Special Needs Planning lawyers can help you establish the legal framework necessary to protect your loved one.

Of course, you want to provide for your disabled loved one. The problem is, if you leave the person a lump sum, your “gift” could render your loved one ineligible for vital government benefits he’d otherwise be entitled to, such as SSI or Medicaid.


Generally speaking, a Special Needs Trust (also known as a Supplemental Needs Trust) is a better option. The Special Needs Trust is designed so that the trustee can provide life-enhancing services the government does not ordinarily cover. These services may include special wheelchairs and other equipment, therapies, medical second opinions, travel expenses for medical appointments, etc. The assets in the Trust are not available to the beneficiary for the asking but are totally discretionary. Therefore, they are excluded by the government when it evaluates your loved one’s eligibility for benefits.

You can fund a Special Needs Trust now, while you’re alive, or you can earmark funds through your Will or Trust that will flow into the Special Needs Trust when you’re gone. Other family members can also contribute funds to the Special Needs Trust without fear of endangering the child’s access to government benefits.


An individual in a nursing home may lose California Medicaid long-term care benefits if he/she receives a lump sum of money. California law states that your spouse must receive 30% of your “augmented estate” whether or not the assets are probated.  If you predecease your spouse, his/her inheritance may result in your spouse being dropped from the Medicaid program until the inheritance is completely exhausted.

Fortunately, you may leave the 30% elective share in a Special Needs Trust, thus ensuring that benefits are not interrupted. Under California law, the elective share amount may be left in a Testamentary Special Needs Trust for the benefits of the institutionalized spouse, under the Last Will and Testament of the well spouse. That is why, in a Medicaid case, the Will of the well spouse must always be reviewed, and in most instances, revised to include a Testamentary Special Needs Trust. This ensures that the surviving spouse does not directly receive the elective share, which if over $2,000.00, would result in a suspension of Medicaid benefits.

You may also include provisions in the trust so that when your spouse dies, any remaining trust assets pass to the beneficiaries.

The Special Needs Trust is a complex instrument and should be drafted only by a certified and experienced elder law/estate planning attorney. Contact our Law Firm for assistance.