How Special Needs Trusts Help, and Why They’re Not Enough in California’s Housing Crisis

California is a beautiful place to live, but it has a big problem: it's very expensive. 

Houses cost a lot of money, and rent prices are super high— even in high density housing. This makes it especially tough for families who have a member with special needs. These families often rely on government benefits like Supplemental Security Income (SSI) and Medicaid to help pay for medical care and living expenses. But with the cost of housing so high, how can they afford to live here?

That’s where something called a special needs trust (SNT) comes in. Special needs trusts can help families manage money for a loved one with a disability without losing those important government benefits. But as helpful as SNTs are, they can’t solve everything—especially when it comes to finding affordable housing in California. In this article, we’ll explain what SNTs do, how they help, and why they’re not enough to solve the housing crisis for many families.

What Is a Special Needs Trust?

Imagine you want to save money for someone in your family who has a disability, but you're worried that if they have too much money, they might lose the government benefits that help them pay for things like healthcare or food. A special needs trust is like a special savings account that holds money for a person with disabilities. The best part? The money in the trust doesn’t count against them when they’re applying for benefits like SSI or Medicaid.

Here’s how it works:

Trustee: A person called a trustee manages the money in the trust. This could be a family member, a professional, or even a company. The trustee’s job is to use the money to help the person with special needs.

Beneficiary: The person with the disability is the beneficiary, meaning the trust is set up to help them.

Special needs trusts are designed to pay for things that improve the beneficiary’s quality of life but aren’t covered by government benefits. These can include:

Home improvements or repairs:

Special equipment, like a wheelchair or a computer

Medical treatments that aren’t covered by insurance

Vacations or recreational activities

How Do Special Needs Trusts Help in California?

In California, the cost of living is sky-high. The average home price is over $800,000, and rent for a small apartment can be more than $3,000 per month! This is a huge problem for everyone, but it’s even harder for families who are on fixed incomes, like many who have a family member with a disability.

For these families, every penny counts. Special needs trusts help in a few important ways:

Preserving Benefits: If someone with a disability suddenly has more money (like an inheritance or a gift), they could lose their SSI or Medicaid. An SNT makes sure the extra money can be used to help them, without making them ineligible for these benefits.

Helping with Extra Costs: Even though an SNT can’t pay for basic housing (like rent or mortgage), it can cover things like furniture, property taxes, and home modifications (like building a wheelchair ramp). This makes life a little easier.

The Housing Crisis: Why SNTs Aren’t Enough

Now, here’s the big problem: California’s housing crisis. There just aren’t enough affordable homes for everyone, and the homes that are available cost way too much for many families. This crisis is especially hard for families with special needs members because:

Housing Costs Are Too High: Rent and home prices are so expensive that even with SSI, many families struggle to find a place to live. SNTs can’t cover rent or mortgage payments without risking the person’s benefits, making it difficult to find stable housing.

Risk of Homelessness: With rents being so high, some families are being pushed out of their homes. Over 160,000 people in California are homeless on any given night, and some of them are people with disabilities.

Not Enough Affordable Housing: Even though SNTs help with non-housing expenses, the lack of affordable housing makes it tough for families to stay in their communities. Many families end up moving far away from the places they’ve lived for years, which can be hard for everyone.

The Limitations of Special Needs Trusts

While special needs trusts are a great tool, they have some limits—especially when it comes to housing. Here’s what they can and can’t do:

What Can Special Needs Trusts Do?

What They Can Do:

Pay for things like home improvements, furniture, and appliances.

Help with property taxes and home insurance.

Cover medical care, transportation, and other needs that aren’t paid for by benefits.

What They Can’t Do:

Pay rent or mortgage directly without affecting government benefits like SSI or Medicaid.

Solve the problem of rising housing costs in California.

Because of these limits, families often need more help than just a special needs trust to deal with the high cost of living.

What Needs to Change?

Special needs trusts are helpful, but they’re only one piece of the puzzle. To really help families with special needs members, bigger changes need to happen in California:

More Affordable Housing: The state needs more affordable homes so that people with disabilities—and their families—can find places to live. This could include government programs that build or support low-cost housing for people with special needs.

Better Support for Housing: Programs that help pay rent for people with disabilities could be expanded. This would allow families to stay in their homes without worrying about losing benefits.

New Policies for Special Needs Trusts: There could be changes in the rules about what SNTs can pay for. If trusts could help cover basic housing costs without affecting benefits, families might be able to stay in their homes longer.

What Can Families Do?

If you have a family member with a disability, and you're worried about the cost of living, here are some things you can do:

Talk to a Lawyer: Setting up a special needs trust can be tricky, so it’s important to talk to a lawyer who knows the rules. They can help you figure out the best way to protect your family member’s benefits.

Look for Affordable Housing Programs: California has some programs that help people with disabilities find affordable housing. It’s a good idea to look into what’s available in your area.

Plan for the Future: If you know housing costs will be an issue, it’s smart to start planning as early as possible. Setting up a special needs trust can be a big help, even if it can’t solve everything.

Conclusion

Special needs trusts are a powerful tool that can help families with a loved one who has a disability. They protect important benefits and make sure the person with special needs has the resources they need for a good quality of life. But when it comes to the big issue of California’s housing crisis, special needs trusts can only do so much. The housing crisis affects everyone, but families with special needs members face even greater challenges.

To truly solve these problems, we need more affordable housing, better support programs, and changes in policies that help families stay in their homes. Until then, special needs trusts remain a valuable—but limited—solution for families in California.