How Does a Special Needs Trust Work
People with disabilities may be eligible to receive government assistance like Medicaid, Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI). However, these programs are means-tested, which means they are only available to those who have limited financial means. If a disabled person has more financial resources, or if his or her family wants to provide additional assistance, it could jeopardize the person’s eligibility for government programs.
A special needs trust is a legal solution that allows people with disabilities to have financial resources while still being eligible for government assistance. This article will discuss how a special needs trust works in Texas, the different types of special needs trusts, and how to contact a Texas estate planning attorney for more details.
How Does a Special Needs Trust Work?
When assets are placed into a special needs trust, they become owned by the entity. Since the beneficiary — in this case, the person with the disability — does not have ownership of the funds, he or she can still qualify to receive assistance like Medicaid and SSI.
It is the job of the trustee to distribute the funds to the beneficiary. However, these funds are for the beneficiary’s supplementary needs, which means the trustee must take care to dispense them for purposes that are not covered by government programs. If the beneficiary is receiving SSI to pay for living expenses, for example, the trust should not be used for that purpose.
What Are the Different Types of Special Needs Trusts?
There are three main types of special needs trusts:
- First-party special needs trust: This trust is used for assets owned by the beneficiary. If he or she has an inheritance, for example, it could be placed in a first-party special needs trust to allow him or her to receive government assistance. However, there are two unique requirements for this trust: the beneficiary must be under the age of 65, and the assets must be used to pay back Medicaid when he or she dies.
- Third-party special needs trust: This trust is used for financial resources provided by third parties. Family members and friends, for example, can deposit money into a third-party special needs trust for the beneficiary. In this case, the funds do not go to Medicaid when the beneficiary passes away.
- Pooled trust: This type of trust pools together assets from multiple beneficiaries. It is managed by a nonprofit organization that acts as a trustee and dispenses the funds to the beneficiaries as necessary and in compliance with the law.
Contact a Comal County, TX Special Needs Trust Attorney
A special needs trust can be a great legal tool for people with disabilities if it is drafted by an experienced San Antonio, TX special needs lawyer. Geoff Mayfield, Attorney at Law has the experience and knowledge necessary to create a robust special needs trust that will meet the needs of the beneficiary. Schedule a free consultation today by calling 210-535-0870 now.