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Understanding Special Needs Trusts in Texas
If you have a close family member with special needs, you most likely never stop thinking about the future of your loved one. Parents with a special needs child want to ensure that even when they are no longer there, the child will continue to receive the care and attention they need and deserve.
Special needs trusts can be an excellent way to provide for your loved one in ways that go beyond their basic needs. An estate planning attorney can help you set up a special needs trust that provides your loved one with a secure future and gives you peace of mind.
What is a Special Needs Trust?
A special needs trust is designed to hold assets and provide income for an individual with special needs while preserving their eligibility for benefits such as Medicaid and Supplemental Security Income (SSI). Both SSI and Medicaid are means-tested. In order to be eligible for benefits, an individual must own less than $2,000 in countable assets.
Funds held in a special needs trust do not qualify as countable assets since the beneficiary does not have access to the assets held in trust. The trustee of the special needs trust manages the trust and makes all the decisions, including those regarding income distribution to the beneficiary.
Therefore, a special needs trust beneficiary remains eligible for government benefits while drawing an income from the trust that helps them pay for additional needs.
Self-Funded Special Needs Trusts
A self-funded special needs trust holds assets that the individual with special needs put into the trust. This can include an inheritance or funds from a court settlement, for example. Self-funded special needs trusts can also hold funds from a person that suddenly becomes disabled and has assets in their name. Setting up a self-funded trust allows beneficiaries to remain eligible for government benefits.
It is important to note that with a self-funded trust, Medicaid could demand repayment for any care costs when a disabled individual passes away.
Third-Party Funded Special Needs Trusts
Third-party funded trusts can be funded by family members or others who want to provide for the disabled person. Trusts can hold an inheritance, properties, money, and other assets gifted to the individual.
With a third-party funded trust, there is no risk that Medicaid could ask for repayment when an individual with special needs dies. Any assets held within a third-party funded special needs trust is protected and upon death can be distributed to family members or charities.
An Estate Planning Attorney Can Help You Establish a Special Needs Trust
It is vital that special needs trusts are created and structured correctly to ensure that your loved one remains eligible for government benefits. An experienced estate planning attorney can help you with all aspects of estate planning for your relative with special needs, including creating up a trust that addresses their specific needs. Additionally, an estate planning attorney can continue to advise the trustee in the future.
Caring for a child or other relative with special needs can be challenging. We understand that you may be anxious about the future of your loved one. However, taking action now can give you peace of mind and provide security and stability for your loved one.
Contact The Law Firm of Blanche D. Smith, P.C. to schedule a consultation today and learn all of your legal options by calling (936) 301-0111.