If you have a beneficiary who suffers from a disability, perhaps a handicapped minor or adult child, you should consider leaving their inheritance in a specific and specially-constructed trust commonly referred to as a Special Needs Trust to protect the handicapped child and keep them eligible for public assistance.
A few issues arise for disabled beneficiaries: 1. without public assistance, many such children would have to spend their entire inheritance within a few years on medical and other needs. 2. If you leave the inheritance to them outright, they may be ineligible for public assistance until they spend the inheritance down to the statutory $2,000 limit.
Further, if you mistakenly believe that leaving the disabled child’s inheritance to another child with the understanding that that child will help the disabled child, that child may not follow through on their agreement with you, they may die, divorce, or be sued, and that intended inheritance may not be available to the intended beneficiary.
Special Needs Trusts can be drafted so that family members and friends can make contributions into it, or they can be drafted as part of a revocable living trust estate plan you establish for your family. It can be managed by a selected family member or corporate trustee, and can be available for the beneficiary’s “supplemental needs” – over and above what Medi-Cal (the Medicaid program in California) or SSI would provide.
This trust can provide the disabled beneficiary with specially-equipped automobile, stereo equipment, computer equipment, vacations, and the like.
Even a small amount of money left to this type of trust can make a significant difference in the beneficiary’s lifestyle over a great many years, and yet still keep them eligible for SSI and Medi-Cal.