Special Needs Trust Lawyers in Calabasas, CA 

Types of Special Needs Trust We Can Devise

Third-Party Special Needs Trust (Third-Party SNT)

Funded with assets belonging to someone other than the beneficiary (parents, grandparents, other relatives). The trust is not subject to Medi-Cal payback at the beneficiary’s death, so remaining funds can pass to other family members or charities. This is often the preferred vehicle for legacy planning.

First-Party (Self-Settled) Special Needs Trust

Funded with the beneficiary’s own assets, this is common when a disabled person receives a settlement, an inheritance, or has savings. Federal law permits these trusts when established by a parent, grandparent, guardian, or by court order (sometimes referred to as a D4A trust under federal statute). 

First-party SNTs must contain a Medi-Cal payback clause: upon the beneficiary’s death, remaining funds may be used to reimburse the state for Medi-Cal payments made on the beneficiary’s behalf (with limited exceptions).

Pooled Special Needs Trusts

Administered by nonprofit organizations, each beneficiary has an individual sub-account, but funds are pooled for investment and administrative purposes. Pooled trusts accept first-party funds and may offer lower administrative costs and professional management.

How Special Needs Trusts Are Created & Funded

Creating an SNT involves careful drafting to comply with federal and California law and to enable benefits protection. 

Funding sources include: 

• Settlements (personal injury or wrongful death)
• Inheritances
• Gifts from family
• Life insurance proceeds
• Transfers at death (via a will or third-party trust)

Timing matters. In many cases, setting up an SNT before assets are distributed or developing an estate plan that routes inheritances into a third-party SNT prevents inadvertent loss of benefits.

Trustee Duties & Practical Administration

A trustee plays a critical role in trusts. Duties include:

• Making distributions that are “supplemental” (not basic support).
• Maintaining meticulous records and receipts.
• Filing annual accounting and tax returns as required.
• Coordinating with benefits counselors to avoid adverse effects on Medi-Cal or SSI.
• Investing trust assets prudently and acting in the beneficiary’s best interest.

Choosing the right trustee, an individual, a family member supported by a professional co-trustee, or a corporate trustee, depends on your family’s needs and the complexity of the trust.

Benefits & Tradeoffs

• Benefits: preserves public benefits, provides tailored care and enrichment, creates long-term financial oversight, and protects assets from creditors and mismanagement.
• Tradeoffs: first-party trusts have payback requirements; trusts require ongoing administration and cost; improper distributions can risk benefits. Proper drafting and experienced administration can help reduce these concerns.