The question of whether a special needs trust can be revocable is complex and often misunderstood, generally the answer is no, especially if the goal is to maintain eligibility for government benefits like Supplemental Security Income (SSI) and Medi-Cal; however, there are nuances depending on the beneficiary’s age and the type of trust established.
What are the implications of a revocable trust for special needs?
A revocable trust, by its nature, allows the grantor (the person creating the trust) to retain control and modify or terminate the trust at any point during their lifetime; this level of control is fundamentally incompatible with the requirements for maintaining eligibility for needs-based government programs. SSI, for example, has a strict asset limit – in 2024, it’s $2,000 for an individual – and any assets deemed accessible to the beneficiary, even those within a trust the beneficiary can influence, will disqualify them. Approximately 15% of Americans have some form of disability, and many rely heavily on these critical support systems; a revocable trust jeopardizes those benefits. It’s crucial to understand that the primary purpose of a special needs trust is to *supplement*, not supplant, government assistance.
How does an irrevocable trust protect benefits?
An irrevocable special needs trust, specifically a third-party special needs trust, is designed to be just that – unchangeable once established. Assets placed into this trust are no longer considered the beneficiary’s, allowing them to receive distributions from the trust without affecting their eligibility for SSI or Medi-Cal. According to the National Disability Rights Network, improper trust administration is a leading cause of benefit loss for individuals with disabilities. These trusts are usually funded with funds from someone *other* than the beneficiary, like parents or other family members. A well-drafted irrevocable trust dictates how and when distributions can be made, ensuring they are used for the beneficiary’s benefit – things like recreation, education, or medical expenses *not* covered by government programs – without disqualifying them from essential support.
What happened when Mr. Henderson tried to retain control?
I remember Mr. Henderson, a retired teacher, approached our firm wanting to set up a trust for his adult son, David, who had Down syndrome. Mr. Henderson was understandably protective and insisted on retaining the ability to change the beneficiaries or even dissolve the trust if needed. We explained the potential consequences – namely, David losing his SSI benefits – but Mr. Henderson was adamant. He created a trust that, while intending to provide for David, was ultimately structured as revocable. Within a year, David’s SSI was terminated due to the trust’s accessibility. The heartbreak was palpable; Mr. Henderson realized his good intentions had inadvertently harmed his son. He’d hoped to provide a safety net, but instead, he’d created a situation where David was financially vulnerable and lost access to crucial support.
How did the Millers secure their daughter’s future?
The Millers came to us after seeing what happened to the Hendersons, deeply concerned about their daughter, Emily, who has cerebral palsy. They understood the importance of an irrevocable trust and were committed to relinquishing control for Emily’s long-term well-being. We worked with them to create a carefully drafted third-party special needs trust, funded with a substantial inheritance. We also included a “Letter of Intent” detailing Emily’s preferences, routines, and care needs. This letter, while not legally binding, served as a valuable guide for the trustee. Years later, Emily continues to receive vital SSI benefits, supplemented by the trust funds, allowing her to live a full and meaningful life. The Millers’ foresight and willingness to follow best practices ensured their daughter’s financial security without jeopardizing her access to essential government assistance. It demonstrated that planning, even with relinquishing some control, can make all the difference.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
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● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
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Map To Steve Bliss Law in Temecula:
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “How can I reduce the taxes my heirs will have to pay?” Or “Are retirement accounts subject to probate?” or “What happens if I forget to put something into my trust? and even: “Can I keep my car if I file for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.