How Does a Special Needs Trust Work in Texas?

 Posted on March 18, 2022 in Estate Planning and Probate

If there is anyone with special needs you would like to make one of your estate beneficiaries, a special needs trust is likely the best way to go about it. Also called a “supplemental needs trust,” these trusts allow you to leave money to a disabled adult without jeopardizing any of their public benefits. A trustee will be able to make distributions to the beneficiary to pay for needs or wants that Medicare or Social Security would not cover. However, because the beneficiary cannot withdraw funds at their own discretion, any funds in the trust are not counted as their income for purposes of need-based assistance programs. If you are trying to leave estate property to someone with special needs, your lawyer will most likely suggest using this type of trust. 

Why Do I Need to Use This Type of Trust to Provide for an Adult With Special Needs?

If you use a more traditional type of trust where regular distributions are made or they can withdraw funds at will they will need to report that money as income or a personal resource when applying for important government benefits. The same is true if you use a will and leave them a lump sum. This could lead to your loved one losing access to benefits that they rely on, forcing them to use the money you leave them to pay for things that an assistance program would have covered, such as medical care and housing. 

Especially because medical care for a person with special needs can be very costly, this money is likely to run out very quickly. They will then return to using public benefits in no better position than before they received your gift. 

When you use a special needs trust, the beneficiary cannot make withdrawals at will, so those funds are not counted against them for purposes of applying for need-based benefits. Your loved one is then free to use your gift for other things that will improve their quality of life, like entertainment, new clothes, or just about anything else they may want.

How is a Special Needs Trust Administered?

You will appoint a trustee - someone you trust to exercise good discretion in handling the funds and making distributions responsibly. Your trustee will manage the funds as you have directed. It is up to the trustee to make distributions to your beneficiary as necessary and appropriate. 

When your beneficiary needs money for a need not covered by their benefits or even something they want, they can ask the trustee to make a distribution. The trustee may grant the beneficiary’s request at their discretion. This protects the beneficiary as well, as the trustee can help monitor and control their spending. 

Call a Guadalupe County Special Needs Trust Attorney

Attorney Geoff Mayfield is experienced at designing special needs trusts to suit the needs of our clients and their beneficiaries. Our Seguin special needs trust lawyers are skilled at protecting estate beneficiaries with special needs. Call 210-535-0870 for a free consultation. 

Source:

https://www.hhs.texas.gov/handbooks/medicaid-elderly-people-disabilities-handbook/f-6000-types-trusts