What is a "special needs" trust?

Sometimes clients want to leave a gift to a beneficiary who is receiving government benefits (e.g., Medi-Cal). However, leaving a gift outright to that person might jeopardize the ability to continue receiving those benefits.

Incorporating "special needs" provisions in your estate planning documents can help a beneficiary preserve his or her ability to continue receiving government assistance by providing that the gift to the beneficiary will be held in a special trust and only be used for that person's "supplemental" needs such as travel, entertainment, and special medical care that are not covered by the government. 

A special needs trust created by a person other than someone who is receiving public benefits is not subject to Medicaid liens. Where there's a concern that leaving a substantial bequest to an individual may cause forfeiture of benefits, one should strongly consider incorporating provisions to create a special needs trust.