Special Needs Trusts

These are special trusts designed to protect people with disabilities receiving public benefits like SSI and Medi-Cal.  People on SSI and/or Medi-Cal can only have a small amount of cash.  However, sometimes they come into additional money (e.g. an inheritance or personal injury award) or someone wants to provide them with a little extra money to help out.  If they simply receive the cash in hand, they will generally lose eligibility for SSI and Medi-Cal.  However if the money goes in a special needs trust, which has very strict controls on how the money can be spent, then they can keep eligibility for SSI and Medi-Cal.

There are two types of trusts: third party special needs trusts, and first party special needs trusts.  A third party special needs trust simply means that the money comes from someone other than the public benefits recipient.  So if your brother is on SSI due to his disability, you could set up a third party special needs trust with your own money.  However, if your brother inherited some money, that would be his money, and he would need a first party special needs trust.  Without the special needs trust, the sudden influx of cash would typically make him ineligible for benefits.