What Parents Need to Know About Special Needs Trusts

If you have a child or family member with a disability, you have probably asked yourself: what happens to them when I am gone?

It is one of the hardest questions a parent can face. You want to make sure they are safe, comfortable, and cared for. But leaving money directly to someone who receives government benefits can actually do more harm than good.

That is where a special needs trust comes in. It is one of the most important legal tools available to families in this situation — and most people do not know it exists until they are already in a crisis.

The Basics

What Is a Special Needs Trust?

A special needs trust is a legal account that holds money for someone with a disability. The person does not own the money outright — the trust does. That is what makes it work.

Because the beneficiary does not legally own the funds, those funds do not count toward the asset limits for programs like SSI or Medi-Cal. Benefits stay intact. The money stays available.

A trustee — someone you appoint — manages the funds and uses them to pay for things the government does not cover. Think therapies, technology, travel, hobbies, and personal care.

Why It Matters

What Happens Without One

Without a special needs trust, any money you leave your child goes directly to them. That triggers the SSI asset limit — currently $2,000 for a single person. Their benefits stop until the money is spent back down.

Some parents try to leave money to a sibling with an informal agreement to use it for the disabled child. This is risky. If that sibling faces divorce, debt, or their own death, the money could disappear entirely.

A properly drafted trust is the only legally protected way to handle this. It is not just paperwork — it is your child’s financial safety net.

What It Covers

What Can the Trust Pay For?

The trust can cover a wide range of expenses that improve your loved one’s quality of life. This includes medical equipment, specialized therapies, education, recreation, transportation, and technology.

It cannot replace what SSI and Medi-Cal already cover. The goal is to supplement those benefits — not overlap with them. A good special needs trust attorney will make sure the trust language is set up to stay compliant.

There are specific rules about things like food and housing that can affect SSI if paid directly from the trust. Your attorney and trustee need to understand these rules well.

Choosing a Trustee

Who Should Manage the Trust?

The trustee is the person or organization that manages the trust funds after you are gone. This is one of the most important decisions you will make.

It should be someone who is organized, trustworthy, and willing to stay current on SSI rules. Many families choose a sibling or close relative. Others use a professional trust company or nonprofit.

A trust attorney can help you think through this choice carefully. The wrong trustee — even with the best intentions — can create real problems down the road.

Common Questions

FAQ