Establishing A Special Needs Trust For Your Child

According to KidsData, 3.8% of all children in California have some kind of disability. However, the exact definition of “disability” is broad, and the Centers for Disease Control (CDC) reports a much higher number (4.5% of all 8-year-olds in California) for Autism Spectrum Disorder (ASD). Regardless of how one defines a disability, hundreds of thousands of children in California may benefit from a special needs trust – and the California Department of Education provides special education services to over 850,000 students. A special needs trust (SNT) is an estate planning tool that can provide financial stability for vulnerable individuals while maintaining their access to government resources and effective treatment. How exactly does a special needs trust achieve this goal? This is something parents may want to discuss with experienced California estate planning lawyers. They may reach Wakefield Law Firm at (949) 274-9975 or visit its office in San Diego County. 

Who Needs a Special Needs Trust in California?

Only parents who have disabled children may set up special needs trusts in California. As a result, the first step in this process should be to review the legal definition of “disability” under California law. The Civil Rights Department states that the broad definition of a disability is any condition that limits major life activities. This includes both physical and mental disabilities, whether congenital or developed after birth. California also defines some diseases as disabilities, including HIV/AIDs and cancer. Parents should know that the definition of a disability in California is generally broader than the federal definition. As a result, a wide range of children may need (and benefit from) special needs trusts in California. 

Autistic Children May Benefit from Special Needs Trusts

Autism is one of the most common disabilities for children in California. As many parents know, the “spectrum” of autism can be quite broad, encompassing high-functioning children and those who have more severe developmental challenges. A child with ASD Level 3 may require considerable support throughout the rest of their life, and they often struggle to communicate or interact socially. A special needs trust could be an appropriate choice in this scenario, and it could provide crucial financial support. 

Deaf or Blind Children May Also Benefit From Special Needs Trusts

A considerable number of children in California are deaf or blind, and these individuals may also benefit from special needs trusts. This type of trust may ensure financial support and continued access to treatment throughout life. A child may use their trust assets to make life with this disability easier to bear. 

Consider a Special Needs Trust for Children With Intellectual Disabilities

According to the California Department of Education, an intellectual disability (ID) involves below-average intellectual functioning and problems with adaptive behavior that begin during the developmental stage. This not only affects the educational performance of the child, but it may also pose various challenges throughout adult life. Potential examples of intellectual disabilities include Down syndrome, fetal alcohol spectrum disorder (FASD), cerebral palsy, and traumatic brain injury (TBI). Children with IDs may need special needs trusts for financial support throughout life. 

Why Is a Special Needs Trust Better Than a Normal Trust?

Parents may wonder why they need to set up special needs trusts rather than more straightforward options. Special needs trusts are necessary because without them, children may lose access to various government resources and support. Many of these government programs are specifically designed for low-income individuals, and they are “means-tested.” In other words, a child may become ineligible to receive government support if their parents leave them a substantial amount of money. While a trust transfers legal ownership of assets to a separate legal entity, many government agencies are aware of these strategies – and they will still “count” trust assets as belonging to a disabled child. 

In order to ensure a disabled child still receives sufficient government support, parents must carefully set up special needs trusts that meet various requirements. There are several options, including third-party special needs trusts, first-party special needs trusts, and pooled trusts. The most appropriate option depends on the unique circumstances of the child and their family. Parents may want to discuss their options alongside experienced estate planning lawyers at Wakefield Law Firm. 

What Kind of Government Support Can a Special Needs Trust Preserve?

If set up correctly, a special needs trust can preserve access to various forms of government support. These include Medi-Cal, Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Medicaid, Section 8, and more. Note that some of these programs fall under the jurisdiction of California, while others are federal. They also have different eligibility requirements, including asset and income limits. A disabled child may be eligible for benefits in California but not on a federal scale, depending on their specific type of disability. These varying factors require careful planning for parents planning to set up special needs trusts. Note that many eligibility requirements for government programs change over time. 

What Is the Best Way to Use a Special Needs Trust?

A special needs trust should not be used for anything a government program already covers. Depending on which programs the child becomes eligible for, this may include medical expenses, food, and shelter. Like all trusts, a special needs trust has a “trustee” who manages the distribution of assets. The trustee can ensure that these assets are spent in a way that does not reduce or eliminate eligibility for government assistance. Many disabled children use SNT assets to cover utilities, such as phone or internet bills. The trustee may also help the disabled child increase their quality of life with furniture, entertainment, clothing, transport, and non-essential medical treatments. 

Discuss Special Needs Trusts & Estate Planning With Wakefield Law Firm

The term “special needs” inherently refers to those with unique needs, priorities, and goals. Although an online article may provide basic guidance on special needs trusts, no amount of reading can provide these children with the unique estate planning tools necessary for financial support and continued treatment. In contrast, an estate planning lawyer in California may be able to sit down with parents and discuss the most appropriate strategies to meet their specific goals. With these strategies in place, a special needs child can continue to thrive after their parents pass away – and this type of estate planning could be an effective choice even for young parents. For an opportunity to discuss the next potential steps, consider contacting our legal team at (949) 274-9975 for Wakefield Law Firm. Parents can find our office in San Diego.