FAQ: Planning for a Disabled Heir in California

Q1: What is a Special Needs Trust?

A special needs trust (SNT) is a legal arrangement that allows assets to be held for a disabled person's benefit without counting against eligibility for needs-based public benefits like SSI or Medi-Cal.

Q2: Can I just leave money to a sibling to care for my disabled child?

While some families consider this, it’s risky. The sibling could face legal, financial, or marital issues, or may not follow your intended plan. A special needs trust provides legal protection and accountability.

Q3: Who should serve as trustee?

Choose someone who is responsible, detail-oriented, and familiar with the heir’s needs. Options include:

• A trusted family member

• A professional fiduciary

• A bank or trust company

• You can also name co-trustees for added oversight.

  
  

Q4: Can I use life insurance to fund the trust?

Yes. Many families use life insurance—especially second-to-die policies—to fund a special needs trust after both parents pass. This ensures long-term support without requiring large upfront contributions.

Q5: What happens if the disabled person outlives the funds in the trust?

Public benefits can continue, but lifestyle enhancements from the trust will cease. Planning with the help of financial and legal professionals can help ensure long-term sustainability.

Top 5 Funding Sources for a Special Needs Trust

1. Life Insurance

   • Most common method

   • Predictable funding source

   • Cost-effective, especially when set up early

2. Savings and Investments

   • Designate part of your estate

   • Useful for larger estates

3. Retirement Accounts

   • Use IRA or 401(k) proceeds, but plan carefully due to tax implications

   • Consider designating the trust as a beneficiary

4. Real Estate

   • Can provide rental income

   • Requires careful management by trustee

5. Family Contributions

   • Grandparents, aunts, and uncles can also contribute

   • Useful for birthday or holiday gifts, inheritances, or windfalls

Contact the top-rated California trust and probate attorneys Moravec, Varga & Mooney today to schedule a telephonic consultation. Have questions? call (626) 460-1763 or email LV@MoravecsLaw.com.

Southern California Probate Lawyer Serving all counties in California, including Los Angeles, Riverside, San Bernardino, Sacramento, Santa Cruz & Beyond.