Q: How to inherit from a trust while maintaining government benefits in CA?

A: It is difficult for a lawyer to answer questions without having all the facts of a situation, but it sounds like a Special Needs Trust ("SNT") may be the best option for you. The purpose of SNTs is to provide funds to someone receiving government benefits without disqualifying them from the government benefits. So, the money in the SNT is to supplement the government benefits, not replace them.

There are two types of SNTs: (1) First Party SNTs; and (2) Third Party SNTs. First Party SNTs are funded with assets that belong to the person receiving governmental benefits. First Party SNTs are divided into SNTs for disabled people under the age of 65, and "Pooled Trusts", which can be established for a disabled person at any age. There are very specific requirements for each of these SNTs. Third Party SNTs are funded with assets belonging to someone other than the person receiving governmental benefits, most commonly a parent or grandparent.

SNTs are sophisticated types of trust, so be sure to contact an attorney in your area who has experience drafting them. Best wishes.

A: Receiving your inheritance while preserving your eligibility for government programs is achievable by using a Special Needs Trust (SNT). An SNT allows you to benefit from your inheritance without it directly counting as income or assets, protecting your SSDI, SSI, Medicare, CalFresh, and Section 8 benefits. When properly structured, this trust can cover expenses like housing, medical care, and daily living costs not fully provided by government assistance.

You should review the specific language of your existing trust to determine if it includes provisions for creating or converting to an SNT; if it does not, you can establish your own separate SNT to receive your inheritance. Given that your sister currently manages the trust, it's important to have clear communication or seek assistance to ensure the inheritance transfers correctly without jeopardizing your benefits.

Taking this step proactively will protect your long-term financial security and peace of mind. Remember, careful planning is essential—any direct payout from the trust without appropriate protections could inadvertently reduce or terminate the assistance you rely on. Consulting an attorney experienced with SNTs and government benefits in California is recommended for precise guidance tailored to your circumstances.