Disabled or mentally ill individuals often have a close family member that helps care for them and manage their affairs. California provides a legal mechanism for the family member to assist the disabled or mentally ill individual manage property in a device called a special needs trust. Property includes real estate, finances, and other personal or tangible property like a car or furniture.
Special needs trusts are often set up by parents for the benefit of a child that has special needs. The person managing the property, real estate, finances, or other property, is called the trustee. The person who owns the property is called the beneficiary. In some cases, there is no family member that can serve as a trustee. In those circumstances, the court appoints a trustee.
Many disabled and mentally ill individuals qualify for government benefits, such as Supplemental Security Income, housing subsidies, and medical insurance, like Medicaid because they are unable to work or support themselves. The special needs individual may experience a cessation of government benefits if they receive an inheritance gift or property. Property placed in a trust however, is not considered by the government for purposes of determining eligibility to obtain and maintain government benefits.
Special needs trusts are designed to pay for items that cannot be paid for out of the funds or assistance provided by the government. Keep in mind that if a special needs individual receives any personal income or property, he or she may be disqualified from receiving future government benefits. Special trusts are primary used to pay for education, recreation, counseling and medical care. Medical care includes the purchase of medical equipment, monitors or devices to perform tests, and vehicles, like a transportation van to carry a wheelchair bound person from place to place.
In theory, any person can set up a special needs trust for another provided they follow process and procedure outlined in California courts. In practice however, the process is complex, and provisions may be included in error that knocks out future benefits. The trustee or subsequent trustees may not be allowed to manage the property of the beneficiary if the trust document is found to be invalid. Gifts under perfectly good intentions may disqualify beneficiary for future services, creating stress on the beneficiary and loved ones.
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