Special Needs Trust Attorney in Moorpark

Special Needs Trust Attorney in Moorpark

An inheritance left directly to a person on Supplemental Security Income does not help them. It disqualifies them. SSI allows a recipient to hold no more than $2,000 in countable resources, a figure that has not moved since 1989. A $30,000 gift from a grandparent puts them fifteen times over the limit, and the loss is not theoretical: in 2026 the federal benefit rate is $994 per month for an individual and $1,491 for a couple, and in California SSI eligibility is the gateway to Medi-Cal coverage that is often worth far more than the cash payment. The trust has to exist before the money moves. There is no clean way to unwind a distribution after it lands.

I am an estate planning attorney at Ridley Law serving Moorpark and all of Ventura County. I do this work over Zoom or phone and sign in person. For the full planning overview, see estate planning in Moorpark.

Two different trusts that people call by the same name

Almost every problem I see in this area traces back to one confusion. “Special needs trust” describes two instruments with different rules, different drafting, and very different consequences at the beneficiary’s death.

A third-party trust holds money that never belonged to the disabled person. A parent, grandparent, or sibling funds it. Because the assets were never the beneficiary’s, there is no federal payback obligation, and whatever remains at the beneficiary’s death passes to whoever the person who created the trust named. This is the planning tool, and it is the one most Moorpark families should be using.

A first-party trust holds the disabled person’s own money: a settlement, a direct inheritance that already arrived, back benefits, a retirement account payable to them. Congress authorized these at 42 U.S.C. § 1396p(d)(4)(A), and the price of the exemption is written into the statute. The trust must be established for a beneficiary under 65, and at their death the state must be repaid for Medicaid benefits paid on their behalf before anyone else takes. The Special Needs Trust Fairness Act of 2016 fixed one indignity in the original statute by letting a competent beneficiary establish their own trust, where previously only a parent, grandparent, guardian, or court could do it.

The practical lesson: the difference between these two is usually just timing and titling. The same $200,000 becomes a payback trust or a no-payback trust depending on whether it was routed correctly before it reached the beneficiary.

Settlement money and the Probate Code § 3600 route

Moorpark still has working agricultural ground, equipment, horses, and the injuries that come with them, along with the commuter traffic on 118 and 23. When an injury settlement is payable to a minor or to an adult who lacks capacity, California has a dedicated procedure for it. Probate Code § 3600 et seq. lets the court order settlement proceeds paid into a trust rather than to a guardian or a blocked account, and where the claimant has a disability, that trust can be drafted to meet the § 1396p(d)(4)(A) requirements so the recovery does not destroy the benefits the person is going to need for the rest of their life.

This has to be raised while the case is still open. A personal injury lawyer who is not thinking about public benefits will settle the case, disburse the funds, and create a problem that costs the client their coverage. If someone in your family has a pending claim and also receives SSI or Medi-Cal, that is the moment to call, not after the check clears.

What the trustee can actually pay for

The rule people remember is “no cash to the beneficiary,” and that is right as far as it goes. Cash handed to an SSI recipient is unearned income in the month received. The subtler rule is in-kind support and maintenance, where the Social Security Administration treats someone else paying the beneficiary’s shelter costs as if it were income, reducing the SSI payment by up to roughly one third of the federal benefit rate.

One piece of this got meaningfully better. Effective September 30, 2024, SSA removed food from in-kind support and maintenance calculations entirely. A trustee buying groceries, or a family feeding an adult child at Sunday dinner, no longer generates an ISM reduction. Shelter is still counted: rent, mortgage, property tax, heat, electricity, water, sewer, garbage.

So the trustee has broad room on medical and dental care Medi-Cal will not cover, therapies, a vehicle and its insurance and maintenance, a computer and phone service, education and tutoring, travel, recreation, clothing, furniture, and personal care attendants. The trustee has to be deliberate about anything touching housing, and should pay vendors directly rather than reimbursing the beneficiary.

Housing on family land

Families with acreage here often want the disabled family member to stay on the property. A trust can own real property and let the beneficiary live in it, and that is generally a better structure than having the trust write a monthly rent check, because ownership and occupancy are treated differently from a third party paying shelter expenses. Where it gets complicated is when the property also has to support other heirs, or when siblings will co-own it. Those are solvable problems, but they need to be decided in the drafting, not left to a trustee to improvise in twenty years.

ABLE accounts alongside the trust, not instead of it

An ABLE account under 26 U.S.C. § 529A is the one place a disabled person can hold money in their own name without it counting against the $2,000 SSI resource limit. Up to $100,000 in the account is excluded for SSI purposes. Contributions for 2026 are capped at $19,000, which tracks the federal gift tax annual exclusion the IRS held flat for 2026 in Rev. Proc. 2025-32, with more allowed for a beneficiary who works and has no employer retirement plan.

As of January 1, 2026 the eligibility window widened considerably: the disability must have begun before age 46, up from age 26. That change brings in a large group of people who were shut out, including many whose disabilities arose from an accident or illness in their thirties or early forties. CalABLE is California’s program.

The account does something the trust cannot, which is give the beneficiary direct control over modest spending without a trustee approving each purchase. It does not replace the trust: the balance cap is too low for an inheritance, and funds remaining at death may be subject to a state Medicaid claim. Most plans I draft use both.

Coordinating with the rest of the Moorpark estate plan

A family with a disabled child and other children has to route one share differently from the others. The parents’ living trust should direct the disabled child’s share into the special needs trust rather than to them outright, and every beneficiary designation has to match. I see plans where the trust is drafted correctly and then a life insurance policy or IRA still names the disabled child directly, which undoes the whole structure. Retirement accounts payable to a special needs trust also carry their own tax rules after the SECURE Act and need separate attention.

Well-meaning relatives are the other common failure. A grandparent who leaves $25,000 “to my grandson” in a will written twenty years ago can undo careful planning. Anyone likely to leave the beneficiary money needs to know to direct it to the trust instead.

For conservatorship questions about an adult who cannot manage their own affairs, see conservatorship planning.

Medi-Cal in 2026

California eliminated the Medi-Cal asset test in 2024 and then reversed course. Under AB 116 (2025) § 59, an asset limit returned on January 1, 2026: $130,000 for one person, with $65,000 added for each additional household member, so $195,000 for two. That makes resource planning relevant again for Medi-Cal recipients who are not on SSI, after two years when it largely was not.

Estate recovery remains narrow. SB 833 (2016) limited California’s recovery to assets passing through the deceased beneficiary’s probate estate, codified at Welfare & Institutions Code § 14009.5. Assets held in a properly funded trust are outside the probate estate and outside recovery. This is a genuine distinction between California and states that pursue expanded recovery, and it is one reason the third-party trust is such a durable structure here.

Questions Moorpark clients ask

My disabled sibling lives on the family ranch. Can the trust protect their right to stay? Yes. The trust can own the property outright and permit the beneficiary to occupy it, which avoids the shelter-payment problem that comes with the trust paying rent on their behalf. The harder question is usually what happens when the property eventually has to be divided among other heirs, and that belongs in the document.

Who should be trustee? The person creating the trust decides, not the rest of the family. The job needs someone trustworthy, financially competent, and willing to learn benefit rules that carry real consequences when they are broken. Naming a successor matters as much as naming the first trustee, because these trusts routinely outlive the people who set them up. A family member as trustee with a professional co-trustee or trust protector is a common middle path.

Can the trustee be paid? Yes. A trustee is entitled to reasonable compensation, which the document can fix or leave to what is reasonable in the circumstances. Corporate trustees typically charge an annual percentage of assets and often decline trusts below a minimum size.

Does the beneficiary lose the trust if they start working? No, and the trust is designed to survive changes in their benefits. Earned income affects SSI on its own formula, and losing SSI eligibility does not dissolve the trust or its protections.

What if we already inherited money directly? Then you are in first-party territory, and the fix is time sensitive. Depending on the amount, the beneficiary’s age, and how long the funds have been held, options include a § 1396p(d)(4)(A) trust, a pooled trust, or spending down on exempt items. Do not wait for the next redetermination.

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