FAQs

A special needs trust is a legal trust set up for a person with a disability, usually for the purpose of protecting both their means-tested government benefits and any assets they might inherit.  You can learn more about what special needs trusts are and why you might get one by clicking here.

Essentially, a first party special needs trust is set up by the beneficiary (a person with a disability) (so… a first party), and a third party special needs trust is set up by someone else (a third party), usually a parent or grandparent.  You can learn about the different types of special needs trusts in detail by heading right here.  

One of the major differences between first and third party trusts is the Medi-Cal payback that first party trusts must pay after the death of the beneficiary.  For this reason, third party trusts are almost always preferable if they are an option, but they require planning ahead before the passing of parents or other relatives. 

If a beneficiary receives a direct inheritance or a legal settlement as a plaintiff, the only option is first party.

Pooled trusts were created by Congress to make special needs trusts more accessible for middle-class families. They help reduce legal and trustee fees for clients by allowing them to “pool” their trusts together. Rather than drafting a new trust for each new client, to join a pooled special needs trust you sign on to an existing “Master” trust that has already been drafted by a legal expert in the field. Each client of a pooled trust has their own individual sub-account (funds are only pooled for investment and cash management purposes), but the practice allows the overall pooled assets to be leveraged in investment portfolios for potentially higher gains (similar to a mutual fund). Legally, pooled trusts must be run by a non-profit organization like JLA Trust. Access to a professional trustee with a deep understanding of changing benefit rules and organizational stability, in addition to below-market fees,are the primary reasons people choose pooled special needs trusts.

Individual trusts, on the other hand, are drafted by a lawyer specifically for the individual in question. They are significantly more expensive than a pooled trust, since you are paying a lawyer and a professional trustee on your own, but can be a good option for families with more complex assets.

Some common things our clients spend funds on are:

• Cell phone, internet, and cable tv
• Rent and food (if beneficiary is not receiving SSI)
• Bus passes, Uber/Lyft, and gasoline
• In-home help beyond any IHSS hours
• Out-of-pocket medical and dental expenses
• Transportation including purchasing a vehicle
• Legal Services, Conservatorship, and Care Management Services
• Travel and trips to see family
• Computers, adaptive communication/ technology

And much more!  Trust funds are there to make your life better.  If you’re passionate about movies or music or photography, trust funds can be used to purchase movie tickets, instruments, or a camera.   It depends on you and your needs! 

Funds in the special needs trust must be used for the primary benefit of the beneficiary and cannot be spent on other family members or charitable donations. Also, nothing illegal can be purchased with the funds. However, money in a special needs trusts does not need to be spent exclusively on disability-related expenses, and can be spent for a wide variety of expenses that enhance independence and quality of life such as trips and cultural/recreational events.

Depending on what benefits the beneficiary receives, benefits can be reduced if Special Needs Trust funds are spent on certain things.  For example, SSI recipients can have their check reduced if you receive assistance for food, rent, or utilities, so spending trust funds on these things will result in a significantly reduced monthly check. 

Part of our job as your trustee is to stay on top of these rules, which can be complex, and not spend trust money on things that can get your benefits reduced.   But, if you prefer, we also offer a waiver for clients who are aware of the rules and are willing to see their benefits reduced.

Another piece of our job as your Trustee is preserving funds and making sure Trust Funds are responsibly spent so they can last.  If the beneficiary has a tendency to spend a lot in certain categories, there may be cases where our Trustee would make a decision to restrict disbursements in those categories for that individual.  

A Special Needs Trust is a professional service, so yes, it will always cost money to set up.  The good news is, going with a pooled non-profit Special Needs Trust like JLA Trust is generally the most inexpensive way to set up a trust.  Paying a lawyer to set up a trust and a Trustee to manage it can get pricey very fast.  

You can learn more about the costs and our fees by clicking here.

At JLA Trust, we have a minimum funding amount of $20,000 for an active special needs trust. 

The minimum funding amount for an inactive, future funded special needs trust is $200. Our future funded trusts are generally funded after parents/other relatives pass away with a life insurance policy, pension, or other estate assets.  Future funded trusts will not be activate and available for disbursements until they meet the $20,000 minimum.

Money deposited with JLA Trust is pooled and invested with Charles Schwab and Co in one of three portfolios.  Your trust earns income based on the performance of the investment portfolio.

At the time of enrollment you select a Conservative, Conservative Growth, or a Moderate Growth portfolio.  The Conservative portfolio has 20% stocks, the Conservative Growth Portfolio has 40% in stocks, and the Moderate Growth portfolio has 60% stocks, all with the balance in Fixed-Income investments.  

A Special Needs Trust and a CalABLE account both allow people with disabilities to save money and continue to be eligible for benefits, but they’re not interchangeable, and they actually work really well in tandem with each other.

CalABLE accounts:

• Are only available to those who are disabled before the age of 26
• Make contributions tax deductible
• Have yearly limits on how much can be contributed
• Can only be spent on qualified disability expenses, which can include healthcare, housing, and education.
• Belong to the beneficiary if they are 18 or over, and they are free to spend the funds however they wish.

Special Needs Trusts:

• Are available to any person with a disability
• Do not allow for tax-deductible contributions
• Do not have limits on funding
• Are not limited to disability expenses
• Funds belong to the trust, and the trustee may limit how and when they are spent.

It is not difficult to move funds between these two accounts, and if you are eligible for both, often the answer to “which one of these accounts is the best for family?” is both!

These are just a few of the many resources in the Jewish community which can be helpful as you learn about your options:

• Bet Tzedek Legal Services can assist with conservatorships and other legal resources.
• The Jewish Free Loan Association’s Ruth B. Ziegler Loan Fund for Families of Children with Autism & Special Needs provides interest-free loans of up to $10,000.
• Jewish Family Service and ETTA can offer counseling, referrals and social/recreational opportunities.

Or for a more comprehensive resource guide and personalized assistance, visit the Jewish Federation’s Los Angeles Jewish Abilities Center.  

If you are looking for help with navigating government benefits in your family’s specific situation, we offer one to one consulting sessions.

No, Special Needs Trust funds are irrevocable.  This means no one can take funds back once they are in the trust, even if another family member needs them.  Legally, once they are in the Trust they must be disbursed only for the benefit of the beneficiary.

If you are unhappy with your Trustee, it is possible to ask the Trustee to resign and appoint a Successor Trustee.

You have a couple of different options here.

If you are eligible for a CalABLE account, this is a really good option for you, though note that the maximum contribution per calendar year is now $15,000. The money will have to be spent on qualified disability expenses .

You can also spend it down, but would need to keep receipts to show SSI and Medi-Cal that all expenses were legal and only for the beneficiary.

All trusts operated by JLA Trust will be overseen by a JLA Trust employee serving as Trustee/Fiduciary as per our master trust. Our trustee is a California Licensed Professional Fiduciary who provides the highest level of professional Trustee services. If you are looking to use a different trustee such as a family member, you will need to hire a trust and estate attorney to draft a stand-alone special needs trust. Please note that we are not a law firm.

No. We are a non-profit agency offering pooled special needs trusts that operate off the same single master trust document drafted by an expert trust attorney. If you have very specific needs and our Master Trust does not work for your situation, you will need to hire a trust and estate attorney to draft your own stand alone trust. Please note that we are not a law firm.

Trust funds at JLA are overseen by our Trustee, staff and members of our Board of Directors, invested by True Link Financial and held in either money market accounts or investment portfolios at Charles Schwab. That’s three levels of oversight to ensure that your money is safe. None of our staff has direct access to funds in any trust.

Special needs trust terminate upon death of the beneficiary.

For Third Party trusts, 10% of funds are retained by JLA Trust and 90% of funds are returned to family members named in the joinder agreement.

For First Party trusts, 10-50% of funds are retained by JLA Trust and the rest is used to pay mandatory Medi-Cal claims based on Medi-Cal services used by the beneficiary while they were alive. There are rarely funds left over after a Medi-Cal payback, but if there are, they are distributed to named heirs.

The best way to avoid a Medi-Cal payback is to plan ahead and set up a Third Party trust if possible.