What is a special needs trust?

It is an unfortunate fact that some individuals struggle to care for themselves and to hold down jobs that provide them with necessary income. Often individuals in these difficult scenarios suffer from disabilities and are eligible to pursue financial support from the government. Californians with certain disabilities can receive insurance and financial assistance from the Social Security Administration and other governmental organizations.

Often, though, a person with a disability is disqualified from receiving benefits if they have sources of income that would allow them to provide for themselves. One of those possible sources of income is through an inheritance or income received as the beneficiary of a trust. If a person receives benefits from the Social Security Administration and from a standard trust, their benefits may be eliminated upon review.

This is where the special needs trust may come into play. A special needs trust is established for someone with a disability or someone who may need long-term care due to their inability to care for themselves. As the beneficiary of a special needs trust a person may not have the power to set the amount of financial benefit they receive, the timing of their benefit payments or cancel the trust.

If certain provisions are met a person who receives government benefits may continue to do so even if they are the beneficiary of a special needs trust. The Social Security Administration permits this exception to the general rule limiting the income a person may receive while receiving benefits. Readers who wish to better understand the process of receiving government benefits and special needs trust payments should contact their estate planning attorneys.

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