Families in Bakersfield, Mammoth Lakes, and throughout California often share a common concern. They want to ensure that their child or another family member with a disability is cared for properly after they are gone. A Bakersfield special needs trust lawyer can help your family establish a special needs trust.
Some California families assume that leaving a direct inheritance is the right way to provide a loved one with this support, but simply leaving cash could cause your disabled loved one to lose access to vital government assistance. What is a special needs trust? How do you set one up, and how can it protect benefits for disabled persons in our state?
By learning how a special needs trust works in California, you can create a legacy that enhances and benefits your disabled loved one’s life. A special needs trust legally holds assets for a disabled person. Assets held by a special needs trust do not count toward that person’s eligibility for government benefit programs, including Medi-Cal or SSI (Supplemental Security Income).
The Importance of Asset Limits in California
Public benefit programs like SSI and Medi-Cal are needs-based. This means that to qualify, an individual cannot have more than a certain amount of assets. For a single person, that limit is generally $2,000. You can find more details on these federal resource limits at the Social Security Administration website.
While California previously imposed no asset limits on Medi-Cal recipients, the state established a new asset limit beginning in 2026. For a single person in California, the Medi-Cal asset limit is $130,000 as of 2026. According to the state’s Department of Health Care Services, each additional household member adds $65,000 to that limit.
If you simply leave $150,000 to a disabled person receiving Medi-Cal benefits, that person’s assets will exceed the resource limit. The government may suspend your loved one’s benefits or coverage until the money is spent down, but a special needs trust allows the money to be used for the beneficiary without affecting eligibility for public benefits.
How Do Special Needs Trusts Protect Disabled Loved Ones?
A special needs trust is designed to be supplemental. It is not meant to provide for basic food and shelter. Government benefits are supposed to cover those costs. Instead, a special needs trust pays for items to improve the beneficiary’s quality of life, such as specialized medical equipment, education, and even recreation and travel.
The trustee you select manages the special needs trust. This person or entity is responsible for making distributions on behalf of the disabled individual.
Because the beneficiary lacks direct access to the funds and cannot demand payments, the government does not count the special needs trust assets as a personal resource. In California, a special needs trust must comply with the guidelines set forth in the California Probate Code.
Third-Party vs. First-Party Special Needs Trusts
Two types of special needs trusts may be established in California. Choosing the right one depends on where the money is coming from:
Third-Party Special Needs Trusts
This is the most common type of trust for estate planning. A third-party special needs trust is usually funded with assets from a person, such as a parent, grandparent, or sibling. You can prepare a third-party special needs trust as part of your larger estate plan.
One particular advantage of a third-party trust is what happens to the money upon the beneficiary’s death. You can decide exactly who receives the remaining funds. There is no requirement to repay the state for Medi-Cal expenses incurred during the beneficiary’s lifetime.
First-Party Special Needs Trusts
Sometimes, a person with a disability receives money directly. This might happen due to a personal injury settlement or an unexpected inheritance. In these cases, a first-party trust, also called a (d)(4)(A) special needs trust, may be used.
Under California law, beneficiaries or their representatives must establish a first-party special needs trust before the beneficiary reaches age 65.
The most significant rule for a first-party special needs trust is the payback provision. When the beneficiary dies, the trustee must use any remaining trust funds to reimburse the State of California for the Medi-Cal services the beneficiary received.
Designating a Trustee
The trustee you select must be honest, understand the disabled family member’s specific needs, and follow strict rules regarding trust distributions. Selecting a trustee may be the most important decision you make when setting up a special needs trust.
If a trustee accidentally pays for something the government considers “in-kind support and maintenance,” it could lead to a reduction of the beneficiary’s SSI benefits. Many California families choose a professional trustee or a bank to handle these duties.
Others prefer a trusted family member who can work closely with a Bakersfield special needs trust attorney to ensure compliance. Families must consider the long-term nature of the trustee’s role. Since a special needs trust may last for decades, having a clear plan for successor trustees is vital.
Create a Plan at the Law Offices of Robert H. Brumfield, P.C.
Bakersfield special needs trust lawyer Robert H. Brumfield believes that planning for the worst allows you to enjoy the best. Whether it is buying life insurance or setting up a trust, preparing for the future gives you the freedom to focus on the present.
If you are not sure about your estate planning needs, a free consultation can help you protect your family’s future. Attorney Robert H. Brumfield has spent years serving the Bakersfield and Mammoth Lakes communities and families throughout California. His approach is proactive, addressing potential issues before they become problems for your family.
By carefully establishing a special needs trust, a family can ensure a loved one receives comprehensive care and support without compromising crucial benefits.
Bakersfield special needs trust attorney Robert H. Brumfield is here to help. Contact him by calling the Law Offices of Robert H. Brumfield, P.C. at 661-241-9803 to schedule a free case evaluation, and start building a legacy that brings your family long-term clarity and peace of mind.
