Establishing a Texas Special Needs Trust

 Posted on August 26, 2024 in Estate Planning

Parents of children with special needs typically want to do everything they can to get them every resource to help them live a great life. That also includes setting up ways to ensure that they will keep getting the care they need after their parents are no longer around. Often in situations like this, a family might decide to establish a special needs trust, which can leave someone with financial resources but maintain their eligibility for programs that offer care and basic needs. If you are interested in taking steps to protect your child’s financial future, speak with a skilled Flower Mound, TX estate planning lawyer to learn more.

Government Programs for People with Special Needs

The government has programs like Supplemental Security Income (SSI) and Medicaid that offer financial support to people with special needs. However, if someone has a certain amount of resources, they can be disqualified as a Medicaid beneficiary. A special needs trust is a way to hold assets that can be used for someone receiving Medicaid benefits to pay for a nursing home or other type of long-term care.

When you set up a special needs trust for your child, you are ensuring that they have assets to provide certain amenities long after you are no longer physically there for them, without disqualifying them for government assistance programs. There are several types of special needs trusts you can establish:

• First-party special needs trust: This is a legal arrangement for managing assets that belong to your child, including settlement funds or personal savings, and is administered by a trustee. According to Texas law, any assets that remain in the trust are used to reimburse the state for Medicaid benefits that the beneficiary receives.
• Pooled trust: This is a collective trust fund that combines assets belonging to multiple beneficiaries with special needs into a single investment pool. It is managed by a non-profit organization and maintains individual accounts for each beneficiary. It offers the same protections as other trusts, like maintaining eligibility for SSI and Medicaid, but has the added benefit of pooled resources, which can result in more cost-effective management.
• Third-party special needs trust: This trust is established by someone other than the beneficiary, usually a relative or friend. It differs from a first-party trust because it is not funded by assets the beneficiary owns but instead by assets from the creator of the trust, like gifts or inheritance. Another difference is that any assets remaining in the trust after the beneficiary’s death are not used to reimburse Medicaid like a first-party trust since they are not considered the beneficiary’s property.

Contact a Denton County, TX Special Needs Trust Attorney

If you have a child with special needs and you want to protect their financial future after your death, speak with a knowledgeable Flower Mound, TX estate lawyer. At Colbert Law Group PLLC, we understand that every family has individual needs and we can advise you on which type of special needs trust best suits yours. Call us at 972-724-3338 so we can get started.