How much does it cost to set up a special needs trust in California?
Special needs trusts are designed to allow families to create a detailed plan for their child’s future, while also making sure their child remains eligible for social services as they get older. Here, we’ll discuss the hows and whys of creating a trust and what to consider when naming a guardian and a trustee. We’ll also break down the available options for creating a special needs trust on a limited budget.
Let’s start by looking at the differences between a special needs trust and an ABLE account.
The Achieving a Better Life Experience (ABLE) Act was passed by Congress in 2014 to allow people with disabilities to build savings accounts without affecting their eligibility for government services. Generally, money accrued in an ABLE account can only be used to pay for disability-related expenses, but what this means is fairly broad, and includes anything from housing, transportation, and daily living expenses to equipment, therapies, and education.
Not all states offer ABLE programs, and not all states’ ABLE programs are the same, but all ABLE accounts grow tax-free. As of January 2024, yearly contributions are capped at $18,000; however, those who choose not to participate in an eligible employer-sponsored retirement account can contribute an additional amount up to $14,580 annually (for Alaska and Hawaii residents, this figure is higher).
In California, the ABLE program is called CalABLE. Unlike ABLE accounts in other states, where the maximum amount cannot exceed $100K, CalABLE accounts can grow up to $529,000. (Note that while Medi-Cal benefits are not affected by any amount of money held in an ABLE account, a balance over $100,000 will jeopardize an individual’s Supplemental Security Income and other government benefits.) Ideally, you’ll create both an ABLE account and a special needs trust, as they each offer different advantages.
There are three types of special needs trusts:
- First-party special needs trusts
- Third-party special needs trusts
- Pooled trusts
Do you need a lawyer to set up a special needs trust?
Special needs trusts are typically created in conjunction with a special needs attorney, which can cost anywhere from $2,000–$5,000 (you may consider asking the attorney you choose if they will consider setting up a payment plan). None of the lawyers that our staff consulted recommended setting up a special needs trust without the help of a lawyer — it’s a complicated document, and it’s easy to make mistakes. In addition, a special needs trust is just one piece of overall estate planning.
Third-party special needs trusts are typically set up and administered by a child’s parents. While they cannot be used to pay for “basic needs” like housing or food, as that would disrupt Social Security benefits, third-party special needs trusts have fewer rules governing how the funds can be spent, so long as it helps the trust’s beneficiary. There is also no limit on how much money you can deposit each year, which can be useful if you receive a settlement or inheritance and don’t want to worry about disbursing the funds in smaller year.
How much does it cost to set up a special needs trust in Texas?
One of the most common questions that we often get from clients or attorneys that are thinking about establishing a special needs trust is: ” What are the costs involved in setting up a special needs trust?”
Initially, the legal fee to get a trust up and running can be anywhere from $2,000 to $3,000. These estimates include getting the trust drafted and implemented. In some cases, a court approval process is required as part of the settlement.
Depending on who the trustee is or which entity is serving this trustee, there may be fees charged by a trustee as well. So, whether it’s a corporate trustee, a trust company, or a private, professional trustee, a fee schedule of some sort should outline the trustee’s fees. Some trustees charge based on the amount of assets that are in the trust, and some charge on an hourly basis.
In some situations, a family member may act as the trustee of a special needs trust. If a family member is acting as trustee, the trustee will most often be reimbursed for any expenses incurred, but family member trustees do not generally charge a fee to serve in that role.
The other ongoing fee associated with a special needs trust is the asset management fee. Typically, in a third-party trustee situation, there is a trustee that acts in the best interest of the beneficiary and has a fiduciary obligation to make prudent decisions with the funds in the trust.
Most often, the trustee will hire a third party asset management or investment management company (like Amicus) to manage the assets inside the trust. Investment management companies typically charge an investment management fee — which is usually about 1% per year of the amount of assets that they’re managing.
Ideally, an investment management company should be earning you much more than 1% by investing the assets in the trust. So, hiring an investment manager to prudently invest the funds in the trust is money well spent.
In sum, the expenses associated with a special needs trust are typically as follows:
- Legal fee for drafting and implementing the trust: $2,000 to $3,000
- Trustee fees (if applicable)
- Asset management fee (usually around 1% per year)
If you need help with setting up a special needs trust for you or your client, give us a call. Amicus Settlement Planners can help you decide whether a special needs trust is in the best interest of you or your client. We can talk to you about the fees, and help you pick a trustee — depending on the factors that are unique to that case. We’d love to talk with you and help you figure it out.
What type of lawyer is best for wills?
I recommend an estate planning attorney or elder law attorney. These practitioners handle wills, durable powers of attorney, healthcare powers of attorney, living wills/advance directives, and trusts.
What is a special needs trust in California?
A special-needs trust is a trust for a person with a disability or a child or an adult with special needs.
With a special-needs trust, the beneficiary can continue to receive public benefits even if they have assets.
Special-needs trust (or supplemental needs trust)
Assets are managed as a SNT, not as their own assets. Therefore, a person with disabilities can continue to receive public benefits while spending funds from an SNT for their living expenses and other needs. There are many kinds of SNTs.
- Disability or Self-funded trust: A trust established from own assets, from the receipt of insurance benefits or inheritance.
- Parent, sibling, or legal representative-established Trust: This type of trust is established as assets of other than that of the person with disabilities, and the trustee manages to allocate expenses for needed expenses. Upon death, the person who established the Trust can appoint another sibling or person as beneficiary.
The SNT is established by the court, and upon death, the remaining funds can be transferred to the public benefit organizations which provided social benefits to the trustee, or the asset can be bequeathed to others.
A living trust appoints the dissolution of inheritance after the parents’ passing. By establishing Special Need Trust, the inheritance can be exempt from taxation, or the government does not consider it as an accountable asset in the determination of public benefit eligibility. Even with social welfare benefits, people with disabilities need deductibles generated from health benefits or basic benefits and funds for quality life. Parents can prepare for the future of their children regardless of taxation or social welfare benefits by establishing Special Needs Trust.
Disability welfare is a societal matter, not an individual or family matter. Therefore, the best way to form a team is to have many members in the team. Formed for a beneficiary, gather interested people with love for your child, and exercise your rights by appointing a management team for the trust.
To minimize the possibilities of damage, the interested group of people can discuss and act together instead of making decisions individually. Interested people can include various people such as old, young, professionals, non-professionals, family, friends, religious clergy, and/or neighbors. The quality of life for the disabled person can be promoted with continuous and consistent future relationships. Form a meeting among an interested group of people and continue with it. They will become consistent members and the trustee when the child turns 18. Above is general information and is not to be considered as legal advice. Individual circumstances vary, therefore it might not be pertinent to one’s own individual circumstances. For effective legal advice, overall circumstances and options must be considered and various options applied to individuals must be established with legal basis.
Legal force and degrees vary by state, and laws.
What is the most an attorney can charge for disability?
In most cases, a Social Security disability attorney’s fee is limited to 25% of the retroactive, or “past-due” benefits you are awarded. This fee is “capped” at a maximum of $7,200.00, so the fee is whichever is less: either 25% or $7,200.00. There is no minimum fee.
You usually don’t have to pay anything upfront to a disability lawyer. Instead, any fee is paid out of the back benefits you receive. Usually, Social Security handles the payment of fees directly, withholding the money from your backpay award, and sending the remainder to you.
Yes. While Social Security always has to approve any fee between a lawyer and a disability client, there are a few situations when the fee may be different.
Many Social Security lawyers will either request a costs retainer to handle out-of-pocket costs, or will advance costs as they come up and request you reimburse those costs at the end of the case regardless of whether you win or lose.
Unlike some areas of law where attorneys can earn enormous fees based on large settlements, as we discussed, in most cases, Social Security attorneys are limited to no more than $7,200.00 in fees in any case, and the vast majority of cases, those fees are much lower. Because of this, most attorneys simply can’t afford to take on the costs of developing a case without reimbursement.
If you are concerned about costs, make sure you talk to an attorney about their practices and get it in writing. If at all possible, request a cap on what an attorney will incur in costs without talking to you so you can have some security that you won’t get hit with a large cost bill at the end of your case. Our firm has a clause like this built into every one of our fee agreements that acts as a promise that we will not spend more than a pre-agreed amount on costs unless we get your express approval.
Contact us or call us today at 856-795-8880 for a no obligation claim review.
Has there been an autistic lawyer?
An attorney. An author. An artist. An advocate. Welcome to my online home! I’m glad you’re here. My name is Haley Moss. I was diagnosed with autism when I was 3 years old. Today, I am an attorney, author, advocate, artist, and consultant who is passionate about disability inclusion and neurodiversity. I take that passion to help our world be more inclusive and accessible for people with disabilities. My personal and professional experiences allow me to bring unique insight and perspective across different professions and settings.
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I graduated from the University of Florida with a Bachelor of Arts in Criminology & Law as well as a Bachelor of Science in Psychology in 2015. I completed both degrees in three years. After my time at UF, I attended the University of Miami School of Law, where I was fortunate to be named a Miami Public Interest Scholar committed to promoting access to justice for all. I was the Student Commencement Speaker at my law school graduation in May 2018. When Haley was admitted to the Florida Bar in 2019, she made international headlines as Florida’s first documented openly autistic attorney. Today, I advocate for the legal profession to embrace neurodiversity.
I am the author of four books: “Middle School: The Stuff Nobody Tells You About,” “A Freshman Survival Guide for College Students with Autism Spectrum Disorders: The Stuff Nobody Tells You About,” “Great Minds Think Differently: Neurodiversity for Lawyers and Other Professionals,” and “The Young Autistic Adult’s Independence Handbook.” My original writings about autism and neurodiversity appeared in The Washington Post, Teen Vogue, Bustle, FastCompany and numerous other websites and publications. I also cont