Special Needs Trust Attorney in Ojai

Special Needs Trust Attorney in Ojai

Most writing about special needs trusts assumes a disability that has been there since childhood. A significant share of the families I work with in Ojai are dealing with something else: a disability that arrived in adulthood. A stroke. A traumatic brain injury. Early onset dementia. A progressive neurological diagnosis in someone’s fifties. The planning problem is different in that situation, and some of the standard advice does not apply, because several of the tools in this area have hard age cutoffs that a younger family never has to think about.

I am an estate planning attorney at Ridley Law serving Ojai 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 Ojai.

The age 65 cutoff, and what to do when you are past it

If a disabled person needs to shelter their own money, the standard instrument is a first-party trust under 42 U.S.C. § 1396p(d)(4)(A). That statute requires the trust be established for a beneficiary under age 65. Someone who has a stroke at 68 and receives a settlement or an inheritance cannot use it.

The alternative sits two subparagraphs later. A pooled trust under 42 U.S.C. § 1396p(d)(4)(C) is established and managed by a nonprofit association, which pools funds from many beneficiaries for investment while keeping a separate subaccount for each. The federal statute contains no age 65 restriction on joining. A beneficiary over 65 who needs to protect their own funds is usually looking at a pooled trust or nothing.

Two cautions. Transfers into a pooled trust by a beneficiary over 65 can still raise a transfer-of-assets penalty question for long term care Medi-Cal, which is a separate analysis from whether the trust itself is exempt. And at death, funds remaining in the subaccount are either retained by the nonprofit for its charitable purposes or subject to Medicaid payback, depending on the trust’s terms. Read that provision before signing, because it varies between organizations.

The third-party trust, which has no age limit at all

None of the above constrains what you can do for someone else. A third-party trust holds money that never belonged to the disabled person, funded by a parent, spouse, sibling, or friend. There is no age 65 rule, no payback requirement, and whatever remains at the beneficiary’s death goes where the person who created the trust directed.

For an Ojai couple where one spouse has been diagnosed with something progressive, this is the center of the plan. The healthy spouse’s estate plan should direct assets into a trust for the disabled spouse rather than to them outright, which preserves eligibility for programs that would otherwise be lost the moment the first spouse dies. This is worth doing early, while capacity to sign is not in question. Waiting until a diagnosis has advanced turns an estate planning matter into a conservatorship matter, and the second is slower, public, and considerably more expensive.

Why the numbers are unforgiving

Supplemental Security Income permits $2,000 in countable resources for an individual and $3,000 for a couple. Those figures were set in 1989 and have never been indexed. In 2026 the federal benefit rate is $994 a month for an individual and $1,491 for a couple, per the Social Security Administration. In California, SSI eligibility carries Medi-Cal with it, and for someone with substantial care needs the coverage is worth far more than the monthly check.

So a modest, well-intentioned bequest can cost more than it delivers. This is the arithmetic that surprises people: leaving $40,000 to a disabled relative outright can be worse for them than leaving nothing.

Medi-Cal changed on January 1, 2026

California phased out the Medi-Cal asset test and then brought it back. Under AB 116 (2025) § 59, an asset limit took effect again on January 1, 2026: $130,000 for one person, plus $65,000 for each additional household member, so $195,000 for two. Anyone who was told during 2024 or 2025 that assets no longer mattered for Medi-Cal received advice that has expired.

Estate recovery, by contrast, remains limited. SB 833 (2016) confined California’s recovery to what passes through the deceased beneficiary’s probate estate, codified at Welfare & Institutions Code § 14009.5. Assets in a properly funded living trust do not pass through probate and are therefore outside recovery. For Ojai homeowners this matters a great deal, because the house is usually the asset in question and valley property values mean the numbers are not small.

Trusts that have to run for thirty years

A special needs trust created by a parent or grandparent frequently has to operate for decades after that person is gone, without the one individual who understood exactly what was intended. Trustee selection is the decision most likely to determine whether the trust actually works.

The realistic options: a younger family member with financial competence, which is inexpensive and personal but depends on one person’s continued willingness and ability; a professional or corporate trustee, which brings continuity and knowledge of benefit rules but charges an annual percentage and often declines trusts under a minimum size; or a pooled trust nonprofit, which handles administration and knows the rules well, and is often the right answer for smaller trusts where a corporate trustee is not economic.

Naming a trust protector with power to remove and replace the trustee is worth considering in any long-duration trust. It is the mechanism that lets a family correct a trustee problem in 2045 without going to court. California’s spendthrift rules at Probate Code § 15300 et seq. support the underlying structure by restricting a beneficiary’s ability to transfer their interest and creditors’ ability to reach it.

What the trustee pays for

Cash to the beneficiary counts as income in the month received, so trustees pay vendors directly. Beyond that, the historical trap has been in-kind support and maintenance, where someone else covering the beneficiary’s food or shelter was treated as income and reduced the SSI payment.

Half of that problem is gone. Effective September 30, 2024, the Social Security Administration removed food from ISM calculations. Groceries and meals no longer reduce SSI. Shelter costs still count: rent, mortgage, property tax, heating fuel, gas, electricity, water, sewer, and garbage collection.

That leaves the trustee wide latitude on medical and dental care beyond what Medi-Cal covers, therapies, home modifications, a vehicle and its upkeep, technology and internet service, education, travel and recreation, clothing, and paid caregivers. An ABLE account under 26 U.S.C. § 529A can sit alongside the trust and hold up to $100,000 without counting against the SSI resource limit, with 2026 contributions capped at $19,000. As of January 1, 2026 eligibility extends to those whose disability began before age 46, raised from 26, which newly qualifies many people whose conditions arose in mid-life.

Coordinating the Ojai estate plan

The special needs trust is one component and it fails if the rest does not match. A living trust that pours the disabled beneficiary’s share into the special needs trust is the standard structure, and every beneficiary designation on retirement accounts, annuities, and life insurance has to be consistent with it. A single stale designation naming the disabled person directly can defeat the entire plan.

Families who moved here later in life often carry documents from another state. Those are worth reviewing rather than assuming. For conservatorship questions about an adult who can no longer manage their affairs, see conservatorship planning.

Questions Ojai clients ask

My spouse was diagnosed at 70. Is it too late? Not for a third-party trust, which has no age limit. What is foreclosed is the § 1396p(d)(4)(A) trust for their own assets, since that requires establishment before 65. A pooled trust may be available for funds already in their name. The sooner you plan, the more options remain.

My disabled adult child lives here in Ojai. Can the trust pay for housing? Yes, and how it is structured matters. A trust that owns the residence and lets the beneficiary occupy it generally produces a better result than a trust paying rent, because shelter payments made on a beneficiary’s behalf can reduce SSI.

I am serving as trustee and I am not confident about the rules. Get advice before you distribute anything. A single wrong distribution affects benefits for that month and can trigger an overpayment the beneficiary has to repay. I review trust documents, explain what applies, and advise on specific distributions.

What happens when the beneficiary dies? In a third-party trust, the remainder goes to whoever the creator named, with no Medi-Cal payback. In a first-party trust, the state is reimbursed for Medicaid benefits paid before any remainder beneficiary takes. In a pooled trust subaccount, it depends on that organization’s terms.

Does the trust file its own tax return? Usually yes, and the treatment depends on drafting. Trusts reach the top federal bracket at a very low income threshold, so where income is taxed is a real planning consideration rather than an afterthought.

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