Call Us Now
e-Mail Us Now
Understanding Special Needs Trust
Special Needs Trusts are essential in estate planning for individuals with disabilities. They are designed to improve the quality of life of individuals with special needs. These trusts can be established through courts, certain close family members or the individuals themselves. Establishing a Special Needs Trust requires considering various legal and financial factors in Texas. To establish a Special Needs Trust, we must first understand what it is and how it works.
A Special Needs Trust is defined as a legal arrangement in which a person with disabilities receives financial support without jeopardizing the potential of receiving government benefits through public assistance programs. These essential government programs include Medicaid and Supplemental Security Income (SSI). These trusts are crucial for providing a way for trustees to manage and distribute funds to beneficiaries without sacrificing their eligibility in these programs. There is much to learn about this type of trust.
Establishing a special needs trust in Texas involves navigating specific legal requirements. People who want to do so should seek the help of an estate planning attorney with experience in Special Needs Planning. Rainey & Rainey, Attorneys at Law, has experienced estate planning attorneys, and we are dedicated to ensuring your estate plan is one you are satisfied with. We have helped many families with their special needs planning and estate planning needs and would happily help you with yours. Call Rainey & Rainey, Attorneys at Law, today at (254)-752-8644 to schedule a consultation.
Types of Special Needs Trusts
There are several types of Special Needs Trusts, each having their specific use. Here are some commonly used types of Special Needs Trusts:
- Pooled Trusts: These are managed by nonprofit organizations, and funds are obtained by pooling investments from multiple beneficiaries. Each beneficiary has an individual account, although the account is managed as a whole. These types of trusts may be used when no individual trustee is available or an individual trust is not financially feasible.
- First-Party Trusts: These trusts contain assets that belonged to the person with the disability. They are often used when the individual receives a settlement from a personal injury lawsuit or inherits the money. A key feature of first-party Special Needs Trusts is that they must include a provision requiring the trust to reimburse Medicaid for benefits received upon the beneficiary’s death.
- Third-Party Trusts: These are created and funded by someone other than the individual with disabilities. The person who makes this fund is usually a close relative to the individual with disabilities, such as a parent, grandparent, or child of the individual. These trusts are typically used for estate planning purposes and do not require repayment to Medicaid upon the beneficiary’s death. They offer flexibility in how funds are used to benefit the individual with special needs.
Besides choosing the type of trust that works best for your situation, you should also remember that any kind of Special Needs Trust will require you to follow Medicaid’s and SSI’s regulations to ensure the individual with disabilities does not lose their government benefits. It is recommended to consult an attorney who is knowledgable in establishing trusts about this.
Benefits of Special Needs Trusts
Special Needs Trusts provide many benefits to you and your loved ones. Besides the aforementioned benefits of enhanced quality of life and retaining the ability to qualify for public assistance programs, establishing a Special Needs Trust for a loved one with disabilities gives you peace of mind about their financial security. It prepares you for the unexpected and provides structure in the case of an unpredictable emergency or event. Establishing this fund will also prevent others from misusing the funds dedicated to an individual and ensure the beneficiary’s best interest.
Anyone seeking to establish a Special Needs Trust should also know its legal requirements. This includes choosing the correct type of trust that fits your financial situation the best, consulting with professionals, drafting the trust document, funding the trust, appointing a trustee, and many other tasks that can be overwhelming. Keeping track of all these tasks and information while ensuring you meet compliance with the SSI and Medicaid rules so as not to lose benefits is a daunting task. This is why many choose to hire an estate planning attorney to stay informed throughout the process.
What To Do Next
Estate planning, in general, can already be a complicated and sensitive process, but a Special Needs Trust requires additional attention due to its many intricacies. Thankfully, the knowledgeable and experienced estate planning lawyers at Rainey & Rainey are equipped to navigate you through difficult decisions and give you the legal assistance you and your family deserve.
Ensuring your estate plan is updated in case of an unexpected event will give you and your family security. If you still need to figure out how to establish a Special Needs Trust, don’t wait. At Rainey & Rainey, Attorneys at Law, we want to hear your case and determine your best course of action. We have seasoned attorneys who can provide compassionate advice on many legal matters. Call us today at (254)-752-8644 or visit our website to schedule a consultation.
