For families in Santa Monica and the greater Los Angeles area, estate planning is about protecting assets, ensuring loved ones are cared for, and preparing for life’s uncertainties.
When you are supporting a family member with a disability, the stakes feel even higher. You want to provide a comfortable life without accidentally disqualifying them from vital government support.
As an experienced estate planning lawyer, I often hear from parents and caregivers who are caught between two powerful tools. They ask me, “Should we use a Special Needs Trust or an ABLE account?” as they navigate the complexities of California’s legal landscape. Both options allow a person with a disability to hold assets while remaining eligible for programs like Medi-Cal and Supplemental Security Income (SSI), but they serve very different purposes.
Choosing the right path requires carefully considering your family’s specific financial goals and your loved one’s long-term needs. My goal is to help you understand how these tools operate under California law so you can make an informed decision for your family’s peace of mind.
Understanding the Basics of the California Special Needs Trust.
A Special Needs Trust (SNT) is a legal arrangement where a third party, known as a trustee, manages assets for a person with a disability. In California, these trusts are often governed by the California Probate Code, specifically sections 3600 through 3613 when established through court proceedings (https://www.dhcs.ca.gov/services/Pages/Special-Needs-Trust.aspx).
The primary advantage of an SNT is that there is no limit on the amount of money the trust can hold. Whether you are looking to protect a $50,000 inheritance or a life insurance payout, the trust keeps those assets from being counted as a personal resource by the Social Security Administration.
There are two main types of SNTs utilized in California:
- Third-Party SNT: This is typically created by parents or grandparents using their own money to provide for a child. One of the biggest benefits of a Third-Party SNT is that it is generally not subject to Medi-Cal recovery after the beneficiary passes away.
- First-Party SNT: This is funded with the beneficiary’s own money, perhaps from a legal settlement or a direct inheritance. Under 42 U.S.C. § 1396p(d)(4)(A), these trusts must include a payback provision, meaning the state must be reimbursed for Medi-Cal expenses upon the beneficiary’s death.
Exploring the Benefits of CalABLE Accounts.
The ABLE Act, or the Achieving a Better Life Experience Act, led to the creation of California’s specific program, CalABLE. This is a tax-advantaged savings account that functions similarly to a 529 college savings plan.
As of January 1, 2026, the eligibility for these accounts has expanded significantly. To be eligible for a CalABLE account, the individual must have developed their disability before the age of 46 (https://calable.ca.gov/faqs/what-is-able-to-work). This age limit was recently increased from 26, making the tool available to a much wider range of Californians.
One of the most compassionate features of a CalABLE account is the independence it offers. Unlike a trust, where a trustee must approve every purchase, the account owner often has a debit card to pay for qualified disability expenses. These include education, housing, transportation, and health and wellness.
However, CalABLE accounts have strict financial caps. In 2026, the annual contribution limit is $20,000. Working beneficiaries may be eligible to contribute more under the ABLE to Work provisions, provided they do not participate in an employer-sponsored retirement plan. Additionally, if the account balance exceeds $100,000, SSI payments are suspended until the balance drops back down.
Comparing Key Differences for Santa Monica Families.
When deciding between these two options, it helps to compare them side by side. While both protect benefit eligibility, their mechanical differences impact your daily life.
| Feature | Special Needs Trust (SNT) | CalABLE Account |
| Contribution Limit | Unlimited | $20,000 per year (2026 limit) |
| Asset Limit | Unlimited | $100,000 (before SSI is affected) |
| Management | Managed by a Trustee | Managed by the Beneficiary or Agent |
| Age Requirement | No age limit for onset | Disability onset before age 46 |
| Tax Status | Subject to trust tax rates | Earnings grow tax-free |
| Medi-Cal Payback | Required for First-Party SNTs | Required for remaining funds |
For a family living near the PCH or commuting through San Jose, the choice often comes down to the amount of funds involved. If you are a homeowner in Santa Monica planning to leave your property to a child with special needs, a CalABLE account cannot hold the value of a California home. In that scenario, an SNT is a necessity.
Why Many Families Choose to Use Both.
It is a common misconception that you must pick only one. In my experience, many families find that the most effective estate plan uses a Special Needs Trust and a CalABLE account in tandem.
This hybrid approach allows you to keep a large sum of money safe in a trust, while periodically moving funds, up to the $20,000 annual limit, into a CalABLE account. This gives your loved one the dignity of having their own debit card for smaller, everyday expenses, while the trust provides long-term protection for major costs, such as specialized medical care.
Furthermore, CalABLE accounts offer a unique advantage regarding housing expenses. Usually, if an SNT pays for rent, it can trigger a reduction in SSI benefits known as In-Kind Support and Maintenance (ISM). But if the money is moved from the trust to a CalABLE account first, and then used for rent, it does not count as income for SSI purposes (https://secure.ssa.gov/poms.nsf/lnx/0501130740).
Protecting Your Legacy with the Tree of Life Law Firm.
The legal procedures in Los Angeles County and throughout California are detailed. A single mistake in how a trust is drafted or how an account is funded can lead to a loss of benefits that your family relies on.
At Tree of Life Law Firm, I go above and beyond in my support and care for my clients. Every estate plan is customized and strategically planned to match your individual needs as an estate owner, business owner, homeowner, or family. I believe that every family deserves a plan that reflects their values and provides a rare level of security for the next generation.
A well-crafted family estate plan clarifies emotionally challenging moments, allowing you to express your wishes clearly and legally. Whether you’re a young couple starting in life, a parent raising children, or a retiree thinking about the next generation, the right plan can bring lasting peace of mind.
If you are ready to explore the best way to protect your loved one’s future, I am here to listen. Call the Tree of Life Law Firm at 408-539-9858 to schedule a free 1st Call to discuss your family-focused estate plan. We serve the Santa Monica and San Jose communities and will work diligently and compassionately to help you achieve the peace of mind you seek.
