Special Needs Trusts in California
If you have a loved one with a disability, you’ve likely asked yourself: What will happen to them when I’m no longer here to help?
That’s where Special Needs Trusts (SNTs) come in. These trusts allow you to set aside funds for your loved one’s care without disrupting their eligibility for public benefits like SSI or Medi-Cal. They also provide a framework for long-term support, caregiving, and financial oversight, or what we might call “parenting when you’re gone.”
At Cookman Law, we help families across California create customized Special Needs Trusts that offer protection, flexibility, and peace of mind. Whether you’re planning for a child, sibling, or other family member, we’ll walk with you every step of the way.
What Is a Special Needs Trust?
A Special Needs Trust is a legal tool that holds assets for the benefit of a person with disabilities,
without those assets counting against strict income and resource limits for benefits like:
Supplemental Security Income (SSI)
In-Home Supportive Services (IHSS)
Medi-Cal
Section 8 Housing
The trust is managed by a trustee who uses the funds to support the beneficiary in ways that enhance (but don’t replace) public benefits. This includes things like therapies, housing, personal care, education, recreation, travel, and more.
Types of Special Needs Trusts
We help families determine the best type of SNT for their situation:
1. First-Party Special Needs Trust
Also called a self-settled or (d)(4)(A) trust, this is funded with the beneficiary’s own money, such as:
- An inheritance received outright
- Accumulated savings before onset of disability
- Litigation settlement
Key features:
- Must be funded before the beneficiary turns 65
- Must include a Medi-Cal payback clause
- Keeps the beneficiary eligible for needs-based public programs
*Please note that our office does not handle First-Party Special Needs Trusts for settlements, but we are happy to refer you to professionals who do.
2. Third-Party Special Needs Trust
This trust is created and funded by someone other than the beneficiary – usually parents, grandparents, or other relatives.
Key features:
- Can be included in a revocable living trust or as a standalone trust
- No Medi-Cal payback required
- Ideal for planned inheritances, gifts, or life insurance policies
We often integrate third-party SNTs directly into our clients’ overall estate plans, ensuring seamless estate planning and benefits protection.
3. Pooled Special Needs Trust
Managed by nonprofit organizations, pooled trusts combine assets from many beneficiaries for investment purposes, while keeping individual accounts.
Best for:
- Families without a suitable trustee
- Beneficiaries with smaller inheritances or settlements
- Situations where professional trust management is preferred
Although we do not handle Pooled Trusts, we can help you assess your options and refer you to reputable organizations when appropriate.
Planning for Mild or Uncertain Disabilities
Not all disabilities are clear-cut, and not all children with IEPs or diagnoses will need lifelong benefits or support. That’s why we offer flexible planning strategies for families in this gray area.
One approach is using a “toggle clause” in your revocable trust. This allows a family member to direct a child’s share of inheritance into a Special Needs Trust only if they qualify for SSI or Medi-Cal at the time of distribution. If not, the assets pass directly to the child or to a different protective trust such as a dynasty trust.
This approach offers:
Why Wealthy Families May Still Need an SNT
You might assume that if your family has substantial assets, a Special Needs Trust isn’t necessary. But even high-net-worth families may benefit from creating one.
Why? Because eligibility for key public services such as supported housing, day programs, and other governmental services often requires enrollment in SSI or Medi-Cal, regardless of personal wealth.
An SNT allows your loved one to access both private resources and public programs, expanding their opportunities and reducing long-term costs.
What Can an Special Needs Trust Pay For?
Funds in a Special Needs Trust can be used for:
- Personal care attendants
- Therapies and specialists
- Assistive technology
- Home modifications
- Travel, hobbies, and education
- Transportation and adaptive equipment
- Supplemental medical costs
The trustee can enhance quality of life without interfering with government benefits.
Make Sure You Have the
Right Team In Place
At Cookman Law, we’re happy to work with the professionals you already have in place to ensure that your estate plan works the way you need it to.
And if you need recommendations for any professionals you might need to add to your team, we’re here to help! We are happy to refer you to the experts you need.
Who Should Be the Trustee?
The trustee plays a central role in
managing the trust, disbursing funds,
and ensuring compliance with program
rules. Your options include:
A trusted family member or friend
A professional fiduciary
A nonprofit trustee (for pooled trusts)
We help you choose the right trustee
(or team of trustees) and ensure they
understand their responsibilities.
How Does an SNT Fit Into Your Broader Plan?
A Special Needs Trust is most effective when integrated into a full estate plan. We ensure:
security
Your living trust and will leave assets to the SNT, not directly to your loved one
memo of intent
You’ve completed a Letter of Intent to guide future caregivers
beneficiaries
Life insurance and retirement account beneficiary designations are updated
family is included
Siblings or other family members involved in the planning understand how the plan works
Without coordination, even well-meaning gifts or inheritances can cause unintended harm. We help you avoid those pitfalls.
Let’s Secure Your Loved One’s Future
A Special Needs Trust is more than a legal document – it’s a lifelong commitment to your loved one’s care, independence, and dignity. At Cookman Law, we treat it that way. We bring deep experience, technical knowledge, and heartfelt understanding to every family we serve.
Let’s build a plan that protects your loved one today and long after you’re gone. Schedule a consultation with our team to get started.