Special Needs Trust Attorney in Westlake Village

Special Needs Trust Attorney in Westlake Village

A single inheritance can eliminate years of government benefits in an instant. If a disabled person receiving SSI, Medi-Cal, or SSDI receives money directly, whether from an inheritance or a gift, it counts as a resource and their benefits end. The current SSI resource limit is $2,000 for an individual and $3,000 for a couple, a number that has not changed in years and that a single unplanned gift or inheritance can blow through immediately. The special needs trust has to be established and properly funded before the money arrives. There is no retroactive fix.

I am an estate planning attorney serving Westlake Village and all of Ventura County. I do this work over Zoom or phone and sign in person. At Westlake Village wealth levels, a special needs trust often needs to be coordinated with a larger estate plan involving multiple trusts, irrevocable structures, and significant assets. Getting that coordination right matters. Start with the broader context at estate planning in Westlake Village.

Third-party versus first-party trusts

A third-party special needs trust is funded by someone other than the disabled beneficiary. A parent sets it up with their own assets for the benefit of a disabled child. At death, the remaining trust assets pass to other heirs without a payback obligation to Medi-Cal. A first-party special needs trust is funded with the disabled person’s own assets, typically because they received an inheritance or lawsuit settlement directly. First-party trusts must include a Medi-Cal payback provision under federal law. In Westlake Village estates where a disabled beneficiary might inherit substantial assets, the distinction matters enormously and the planning needs to be done years in advance.

ABLE accounts as a complement, not a replacement

An ABLE account lets a disabled individual hold up to a statutory limit in a tax-advantaged account without it counting against SSI or Medi-Cal resource limits, and the account owner has direct control over spending in a way that a trust does not provide. For Westlake Village families, an ABLE account is a useful tool for smaller, discretionary amounts the beneficiary manages personally, but it is not a substitute for a properly funded special needs trust when the family is passing down a meaningful inheritance. The two work well together: the trust holds the bulk of the funds and manages distributions according to the rules, while the ABLE account gives the beneficiary some measure of independence over day-to-day spending.

Coordinating with the larger estate plan

In a high-net-worth Westlake Village estate, the special needs trust for a disabled child may receive a significant inheritance at the parents’ death. The trust’s structure needs to be compatible with the overall estate plan, including any irrevocable structures. The trustee for a special needs trust needs to understand the benefit rules deeply because an improper distribution can disqualify benefits for a month or longer. Many Westlake Village families use a professional trustee or a pooled special needs trust managed by a nonprofit organization precisely because the trustee role requires deep, ongoing knowledge of benefit rules that most family members do not have. For families who also face conservatorship questions about an adult child, see conservatorship. A living trust that pours into the special needs sub-trust at death is the standard mechanism.

What happens if the beneficiary is already an adult receiving benefits

Many Westlake Village families come to me after a disabled adult child is already receiving SSI or Medi-Cal, and the parents are only now updating their estate plan to account for that. In that situation, the parents’ living trust needs explicit language directing that the child’s share pours into a properly drafted special needs sub-trust rather than to the child outright. A generic trust that simply says “divide equally among my children” can unintentionally disqualify a disabled child from benefits the moment the parent dies, even though disinheriting that child was never the intent. I review existing plans specifically for this gap, because it is one of the most common and most avoidable mistakes I see in older Westlake Village trusts.

What the law requires for a properly structured trust

42 U.S.C. §1396p(d)(4)(A) is the federal statute that authorizes a first-party special needs trust, sometimes called a payback trust, and it requires that any funds remaining at the beneficiary’s death first reimburse the state for Medi-Cal benefits paid during the beneficiary’s life before anything passes to other heirs. Cal. Prob. Code §3604 requires court supervision when a special needs trust is being established for a minor or a person with a disability using their own settlement or inheritance funds, which adds a layer of oversight designed to protect the beneficiary. And 42 U.S.C. §1382b(e) is the federal provision authorizing ABLE accounts, the complement described above. Getting the structure and the paperwork right the first time matters, because a trust that does not comply with these provisions can itself become a disqualifying resource.

Questions Westlake Village clients ask

What can the trust pay for without affecting benefits? The trust can pay for supplemental goods and services that SSI and Medi-Cal do not cover: technology, education, transportation, recreation, personal care, and similar expenses. Direct cash distributions and payments for food and shelter are the distributions that can trigger benefit reductions. The rules are specific and the trustee needs to follow them carefully.

How much should we fund the trust? There is no single answer. The funding amount depends on the disabled person’s projected lifetime needs, the cost of care, the expected benefits they will receive, and the family’s overall estate plan. I will help you think through the numbers during the planning process.

Can my sibling serve as trustee? They can, but the trustee role for a special needs trust carries significant responsibility and knowledge requirements. A sibling who makes a wrong distribution can inadvertently end the beneficiary’s benefits. Many families name a sibling as a co-trustee alongside a professional trustee to balance family judgment with technical expertise.

Does a first-party special needs trust really have to repay Medi-Cal at death? Yes. Under 42 U.S.C. §1396p(d)(4)(A), any funds remaining in a first-party trust at the beneficiary’s death must first reimburse the state for Medi-Cal benefits paid during the beneficiary’s lifetime before anything passes to other heirs. A third-party trust, funded by a parent’s own assets rather than the beneficiary’s, does not carry this payback requirement, which is one reason the distinction between the two trust types matters so much.

Book a consultation at https://ridley.click/eric-60 or call 805-244-5291. I serve Westlake Village and all of Ventura County.

See also conservatorship and living trust planning for Westlake Village, and our guide to common estate planning mistakes.