Special Needs Trust Attorney in Folsom, California

When you have a child or loved one with a disability, your greatest fear is what happens to them when you’re gone. Will they have enough money? Will they lose their government benefits? Who will manage their finances and make sure they’re cared for?

A special needs trust—also called a supplemental needs trust—protects your disabled loved one’s inheritance while preserving their eligibility for crucial government benefits like SSI (Supplemental Security Income) and Medi-Cal. Without this specialized planning, a direct inheritance can disqualify them from benefits they depend on for healthcare, housing, and basic needs.

For Folsom families—where the median household income exceeds $139,000 and many parents have substantial estates to leave—special needs planning is essential. You’ve worked hard to provide for your family. A special needs trust ensures your disabled child or loved one benefits from your legacy without losing the government support they need.

California Probate and Trust, PC has been helping families protect disabled loved ones since 2007. We’ve served over 6,000 clients and drafted countless special needs trusts, preserving both inheritances and benefit eligibility. We understand the complex interplay between federal SSI rules, California Medi-Cal regulations, and estate planning—and we’ll guide you through every step.

What Is a Special Needs Trust?

A special needs trust holds assets for the benefit of a person with a disability while preserving their eligibility for means-tested government benefits. The trust pays for expenses that government benefits don’t cover—travel, entertainment, education, therapy, adaptive equipment, and quality-of-life improvements.

Government benefits like SSI and Medi-Cal have strict asset limits. SSI requires recipients to have less than $2,000 in countable assets. A direct inheritance—even $10,000—disqualifies them until they spend down below $2,000 again. During that disqualification period, they lose:

• Monthly SSI income (up to $943/month in 2024)
• Medi-Cal health coverage (medical, dental, prescriptions)
• In-Home Supportive Services (IHSS)
• Regional Center services
• Housing assistance

A properly drafted special needs trust avoids this. Assets in the trust don’t count toward the $2,000 limit. The beneficiary keeps their benefits and gains access to additional resources for a better quality of life.

Why Folsom Families Need Special Needs Trusts

Folsom families often have substantial estates—homes worth $700,000+, retirement accounts, Intel stock options, investment portfolios. Without planning, these assets pass to all children equally. For a disabled child on SSI and Medi-Cal, this inheritance triggers benefit loss.

Example: You pass away and leave $300,000 to your disabled son. He loses SSI and Medi-Cal immediately. He must spend the $300,000 on his care—paying for medical expenses Medi-Cal used to cover—until he’s back under $2,000. Only then can he reapply for benefits. Depending on his needs, $300,000 might last 3 to 10 years, then he’s back on government assistance anyway—but now he’s lost years of benefits and your entire inheritance.

Better Solution: You leave $300,000 in a special needs trust. Your son keeps SSI and Medi-Cal. The trust pays for things government benefits don’t cover—vacations, a better living situation, hobbies, adaptive technology, therapy animals. He has a better life, government benefits continue, and the inheritance lasts his lifetime.

Types of Special Needs Trusts

1. Third-Party Special Needs Trust

Funded with someone else’s money—typically parents’ or grandparents’ assets. You create this trust in your estate plan to protect your disabled child’s inheritance. No payback to the state is required. When the beneficiary dies, remaining assets pass to other family members.

2. First-Party (Self-Settled) Special Needs Trust

Funded with the disabled person’s own money—lawsuit settlements, personal injury awards, inheritances received before a trust existed. California requires these trusts to include a Medi-Cal payback provision: when the beneficiary dies, the state recovers Medi-Cal expenses paid on their behalf. Remaining assets go to heirs.

3. Pooled Special Needs Trust

Managed by nonprofit organizations, these trusts pool assets from multiple disabled individuals while maintaining separate accounts for each beneficiary. Good for smaller estates or when family members can’t serve as trustee. The nonprofit charges fees and may retain a portion of remaining assets when the beneficiary dies.

What Can a Special Needs Trust Pay For?

The trust can pay for anything that improves quality of life without replacing government benefits. Allowed expenses include:

• Medical and dental care not covered by Medi-Cal
• Rehabilitation, therapy, and training
• Education, tutoring, and job coaching
• Travel and vacations
• Entertainment (concerts, sports, hobbies)
• Electronics and adaptive technology
• Vehicle purchase and maintenance
• Home furnishings and comfort items
• Legal and professional fees
• Companion care beyond IHSS hours
• Quality-of-life improvements (better housing, accessible features)

What the Trust CANNOT Pay For:

• Direct cash to the beneficiary (triggers SSI reduction)
• Food or groceries purchased for home use (in-kind income)
• Shelter costs (rent, mortgage, utilities) paid directly to beneficiary (reduces SSI)

These restrictions are complex. An experienced special needs attorney ensures trust distributions comply with SSI and Medi-Cal rules.

Choosing a Trustee

The trustee manages trust assets, makes distribution decisions, and ensures compliance with SSI and Medi-Cal rules. Choosing the right trustee is critical.

Family Member: Siblings or relatives who know the beneficiary well and understand their needs. Pros: personal knowledge, no fees. Cons: lack of expertise in SSI/Medi-Cal rules, potential family conflicts, burden on the family member.

Professional Trustee: Banks, trust companies, or professional fiduciaries. Pros: expertise, objectivity, longevity. Cons: fees (typically 1-2% of trust assets annually), less personal connection.

Co-Trustees: Combine family and professional—family member provides personal knowledge, professional provides expertise and compliance oversight. This is often the best solution.

Special Needs Trust vs. Direct Inheritance

ABLE Accounts: A Complementary Tool

California’s ABLE (Achieving a Better Life Experience) accounts allow disabled individuals to save money tax-free without losing SSI or Medi-Cal. Up to $18,000 per year (2024) can be contributed. Funds can pay for disability-related expenses.

ABLE accounts work well for smaller amounts and short-term needs. Special needs trusts are better for larger estates and long-term planning. Many families use both—ABLE for immediate needs, special needs trust for lifetime support.

Serving Folsom and Sacramento County

Our office is located in Granite Bay, just 10 minutes from Folsom via Douglas Boulevard. We serve families throughout Sacramento County and coordinate with regional centers, disability service providers, and government benefits specialists.

We understand the stress and uncertainty families face when planning for a disabled loved one. Our approach is compassionate, thorough, and focused on your family’s unique needs.

Frequently Asked Questions

Can my disabled child inherit anything without losing benefits?

Yes, through a special needs trust. Direct inheritances cause benefit loss, but properly structured trusts preserve eligibility.

What happens if I die without a special needs trust?

Your disabled child inherits their share directly, loses SSI and Medi-Cal, and must spend down the inheritance before reapplying for benefits. A court may need to establish a conservatorship to manage the funds.

Can I create a special needs trust in my will?

Yes. Testamentary special needs trusts (created in your will) take effect when you die. But a standalone trust created during your lifetime offers more flexibility and can receive gifts from multiple sources.

What if my child receives a lawsuit settlement?

Settlement proceeds must go into a first-party special needs trust to preserve benefits. We work with personal injury attorneys to ensure proper trust establishment before settlement funds are released.

How much does a special needs trust cost?

Initial drafting typically costs $3,000 to $7,000 depending on complexity. Ongoing trustee fees (if using a professional) range from 1% to 2% of trust assets annually. Compare this to losing lifetime government benefits worth hundreds of thousands of dollars.

Can the trust pay for housing?

Yes, but carefully. The trust can own a home where the beneficiary lives rent-free (doesn’t reduce SSI). But if the trust pays rent or mortgage directly to the beneficiary, SSI is reduced dollar-for-dollar up to the maximum benefit amount.

Related Services in Folsom

• Living Trust Folsom
• Estate Planning Folsom
• Elder Law Folsom
• Trust Administration Folsom

Serving Nearby Communities

• Special Needs Trust Sacramento
• Special Needs Trust Roseville
• Special Needs Trust Granite Bay