What Can a Special Needs Trust Pay For in California?

You want your child to have a full life long after you are gone: the classes, the therapies, the trips with family, the friends who keep them connected. In California, a special needs trust can generally pay for much of that, from therapies and classes to travel and a new phone, without reducing SSI, when the trustee pays the right way. And when the trust is doing most of its work, often after you are gone, you will not be the one deciding each payment. The trustee you choose will, guided by what your trust says.

So the question is not only what the trust can pay for. It is whether your plan gives the right people the authority, the money, and the instructions to pay for the life you want for your child.

Since 2010, we have helped California families create special needs trusts and keep their plans current. Let’s look at what the trust can pay for, what needs care, and how to set up your plan so your child’s trustee spends the way you would.

On this page

• What a special needs trust can pay for
• Why the way the trustee pays matters to your plan
• How the trust works with Medi-Cal
• Which payments are generally fine, and which need care
• Whether the trust can pay for housing, a home, or a car
• Who will decide what the trust pays for
• How to set up a trust that pays for the life you want for your child

What can a special needs trust pay for in California?

A special needs trust can generally pay for the things that make your child’s days fuller, as long as the trust allows it and the trustee pays the right way. Paid directly to the provider, these generally do not count as income to your child for SSI:

• Learning: classes, tutoring, and school costs
• Care: therapies, and medical care Medi-Cal does not cover
• Fun and friendships: lessons, camps, outings, and recreation
• Getting around: rides, transit, and other transportation
• Staying connected: a phone and the phone bill
• Home comforts: furniture, a computer, or a TV
• Trips: airfare, a hotel on a short trip, and other travel costs
• Clothing: clothes and shoes
• Help from professionals: a care manager or another professional who supports your child

These are examples, not a promise. What your child’s trust can pay for starts with what the trust itself says, which is one reason the trust you put in place matters so much.

Used this way, the trust pays for the extras, and your child’s public benefits keep covering what they cover. More of what you leave goes toward the life you want for your child.

Why does the way your child’s trustee pays matter to your plan?

SSI looks at what your child receives, not only at what the trust spends. For SSI, income is anything your child receives in cash or in kind that can be used for food or shelter. Generally, the more countable income your child has, the lower the SSI check.

• Paying the provider directly generally is not income to your child, except for housing costs, which are covered below. Since September 30, 2024, that includes groceries and meals. Household goods your child keeps and uses, such as a computer or furniture, are generally fine too.
• Cash handed to your child counts as income. So does money put on a debit card in your child’s name.
• Gift cards count like cash when they can buy food or shelter, such as a grocery, restaurant, or general Visa card. Even a store card can count if your child is allowed to sell it for cash.

These rules are why the person you choose as trustee matters. A trustee who knows them can say yes to far more of your child’s life.

SSI looks at both the income your child receives and the assets they own. Social Security disability benefits follow different rules: SSDI is based on your child’s own work record, and Childhood Disability Benefits on a parent’s. It helps to know which one your child receives.

How does a special needs trust work with Medi-Cal?

For many families, Medi-Cal matters as much as SSI, or more. Medications, therapies, doctor visits, and hospital care can be the largest costs in your child’s life, and Medi-Cal often pays for them. This guide spends most of its time on SSI’s payment rules, but your plan needs to work for both.

In California, a child who receives SSI generally receives Medi-Cal along with it. Social Security’s SSI decision is also the Medi-Cal decision. So paying the right way to keep SSI often helps keep Medi-Cal in place too.

Not every child gets Medi-Cal through SSI. Some qualify through Medi-Cal programs based on income, which do not look at assets. Others qualify through a Medi-Cal disability program, and most of those again look at assets as of January 1, 2026. A third-party special needs trust, funded with your money rather than your child’s, is generally not counted as your child’s asset for Medi-Cal. Medi-Cal treats what an irrevocable trust holds as unavailable until the trustee pays it out.

The trust can also pay for medical care Medi-Cal does not cover. Which Medi-Cal program your child is in, now and after 18, can change how the trust should be written and used, so it is worth planning for with your attorney.

Which special needs trust payments are generally fine, and which need care?

Here is how common payments generally line up for SSI. As you plan, think about what you want your child’s trustee to be able to provide. Your child’s trust and the trustee’s judgment come first.

If the trust allows it, a payment in the middle column can still be the right choice for your child. It just deserves a conversation before the check is written.

If you are planning a special needs trust, or reviewing one you already have, schedule an Initial Planning Session or call (949) 718-0420. We will talk about what matters for your child, the people who may serve, and how your planning fits together.

Can a special needs trust pay for housing, a home, or a car?

Maybe you picture a home where your child feels settled, or a car that makes daily life easier. Often the trust can help pay for those things, with some care first.

Housing. When the trust pays for your child’s housing, SSI generally counts it as support, and that can reduce your child’s SSI. Housing here means rent, mortgage payments, property taxes, and utilities like gas, electricity, water, sewer, and trash. The reduction has a limit: SSI uses set formulas to value this kind of support, so the cut generally cannot go above about one-third of the federal SSI amount. If your child’s trust allows it, that trade can be worth it. A safe, stable place to live may matter far more to your child’s life than a lower SSI check.

Living with you. If your adult child lives with you, SSI can count the free housing you provide. There are ways to avoid that, such as your child paying rent of at least the amount Social Security sets each year, or paying a fair share of the household’s housing costs, from their own money rather than the trust. The rules are specific, so this is worth planning for with your attorney.

Food and trips. Since September 30, 2024, SSI no longer counts food that someone else provides as support, so groceries and meals the trust pays for directly generally no longer reduce SSI. Gift cards for groceries or restaurants still count as cash. A hotel the trust pays for on a short trip away from home, such as a vacation, generally does not reduce SSI, because your child’s home is still their home. A trip abroad is different: if your child is outside the United States for 30 days or more in a row, SSI generally stops until they have been back for 30 days in a row.

A home. A trust can buy a home for your child to live in. SSI generally counts the purchase as housing support in the month it happens, and it counts mortgage payments, property taxes, and utilities the trust pays the same way. Simply living in a home the trust holds for your child does not count as free housing. Repairs and accessibility work are different: when the trust pays for a wheelchair ramp, an accessible bathroom, or a new roof on a home it holds for your child, SSI does not count that as income.

A car. SSI generally does not count one car used to get your child, or someone in your child’s household, where they need to go. A second car can count. So if your child already has a car, or is under 18 and lives with parents who own one, a second car needs a check first, because it can count as income in the month your child receives it. How the car is titled matters too. Once there is a car, the trust can generally pay its gas, insurance, and repairs.

Who will decide what the special needs trust pays for when you can’t?

The trust’s own terms come first, and then the trustee’s judgment. California law requires a trustee to follow the trust document. Most special needs trusts give the trustee broad discretion, and the law still requires the trustee to use it in good faith and for the trust’s purpose.

A special needs trust is generally written so your child cannot demand payments or direct the money toward their own support. That design is part of what keeps the trust from counting as your child’s own money for SSI. It also means the trustee you choose carries real responsibility, often for decades. That oversight protects your child, too: from people who might take advantage of them, and from money spent faster than it should be.

That makes choosing the trustee one of the most important decisions in your plan. Look for someone who:

• Knows your child and will keep your child’s life at the center of each decision
• Will learn the benefit rules above, or get help with them, before spending
• Keeps careful records. California law generally requires a trustee to account to the beneficiary at least once a year.
• Can serve for the long run, with a backup named in case they cannot

The trustee manages money. It does not give anyone authority to make medical or other decisions for your child after 18. That is a separate step, and the options range from supported decision-making to a limited conservatorship, which a court grants only when it is necessary. Our guide to a limited conservatorship when your child turns 18 explains what changes at that birthday.

How do you set up a special needs trust that pays for the life you want for your child?

A trust can only pay for a good life if the rest of the plan is in place around it. That means three things, all centered on your child’s life:

• The right people, with the authority to act. A trustee and a backup trustee who understand your child and will use the trust well.
• The right resources, coordinated so they reach the trust. A trust can be carefully drafted and still fail to accomplish its purpose if the bank and investment accounts, life insurance, and retirement beneficiary designations are not coordinated to fund it.
• The right instructions, written down for the people who step in. Your trust can guide how the trustee spends. A Memo of Intent (also called a Letter of Intent) tells them who your child is: the routines, the favorite places, and what a good week looks like.

The trust is the tool. It is not the goal. The goal is your child’s life, with its comforts, people, and possibilities intact.

What does a good week look like for your child? The routines, the people, and the favorite places matter as much as the purchases. Writing them down helps whoever serves as trustee spend the way you would, and it is a strong start on a Memo of Intent.

Our special needs planning begins with your child’s life. In your Initial Planning Session, we talk through what you want the trust to pay for and who you would trust to carry it out. Before the session, you fill out a questionnaire about your family. From there, we design the right plan around your goals, usually built on a third-party special needs trust, and we help you choose and guide the right trustee. If you already have a trust, we can look at whether it still fits your child’s life today. For the bigger picture, our guide to special needs trusts in California walks through the whole plan, and our guide to a third-party special needs trust explains how to leave money to your child.

What would you want the person managing your child’s trust to understand about their life? We can start there, then look at the people, resources, and guidance your plan needs. Schedule an Initial Planning Session or call (949) 718-0420.

Laura Meier, Esq., Founder, Meier Law Firm · Newport Beach, California · Last reviewed November 2026

The law behind this guide: 20 C.F.R. sections 416.1100, 416.1102, 416.1103, 416.1120, 416.1121, 416.1130, 416.1131, 416.1133, 416.1140, 416.1149, 416.1202, 416.1216, 416.1218 and 416.1327; Social Security Program Operations Manual System SI 01120.200, SI 01130.200 and SI 01715.010; California Code of Regulations, title 22, section 50489.9; DHCS All County Welfare Directors Letter 25-14; 42 U.S.C. sections 402(d) and 423; 89 Federal Register 21199 (2024); California Probate Code sections 1801, 16000, 16062, 16064, 16080 and 16081.