Special Needs Trust

A Special Needs Trust is a specific type of trust designed to benefit individuals with disabilities while preserving their eligibility for government assistance programs, such as Medicaid and Supplemental Security Income (SSI). This trust allows assets to be held for the benefit of a person with special needs without disqualifying them from these essential benefits.

The key features of a Special Needs Trust include:

1. Eligibility Preservation: By placing assets in a Special Needs Trust, the trust assets are not counted as the beneficiary’s resources, which helps maintain their eligibility for needs-based government programs.

2. Trustee: A Special Needs Trust is managed by a trustee, who is responsible for overseeing the trust assets and making distributions for the benefit of the beneficiary. The trustee can be an individual, such as a family member, or an institution, like a bank or trust company.

3. Distributions: The trust can provide for various expenses that enhance the beneficiary’s quality of life, including medical care not covered by government programs, education, rehabilitation, and recreational activities. However, the trust must be structured so that distributions do not interfere with the beneficiary’s eligibility for public assistance.

4. Types of Special Needs Trusts: There are typically two main types of Special Needs Trusts:

   • First-Party Special Needs Trusts: Funded with the beneficiary’s own assets, often established through a legal settlement or inheritance.
   • Third-Party Special Needs Trusts: Funded by family members or others with the intent to provide for the beneficiary without affecting their benefits.

5. Regulatory Compliance: Special Needs Trusts must comply with federal and state laws, including the Social Security Administration’s regulations, to ensure that they do not jeopardize the beneficiary’s government benefits.

In Texas, including Houston, establishing a Special Needs Trust may involve specific legal considerations, such as ensuring compliance with the Texas Estates Code and working with local attorneys who specialize in estate planning and disability law. It’s important to consult with legal professionals who understand the nuances of Texas law when creating a Special Needs Trust to ensure it is properly established and managed.