There are many kinds of trusts used in estate planning. One you may not have heard about before is a special needs trust. This is a trust designed to provide for a person who is receiving certain types of government benefits, such as Medi-Cal or Supplemental Security Income.
Because these programs are means-tested, a beneficiary can lose his or her eligibility if he or she suddenly receives a large amount of cash, say from an inheritance or a lawsuit judgment. But by creating a special needs trust, that money can be placed in the hands of a trustee, who retains legal ownership. The trustee can then use trust funds to purchase goods and services for the beneficiary without compromising government benefits.
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