Many Texans who have disabled relatives utilize public government benefits to help pay for their care. This is necessary because the care can involve high medical expenses, nursing home expenses, or other long-term care costs. Frequently, parents of a disabled child or the spouse of a husband or wife that needs long-term care must plan for the care, and in doing so seek the guidance of an attorney who can draft a Special Needs Trust.
The goal of a Special Needs Trust is to allow an individual to qualify for some form of public benefits and still be able to keep the estate of the potential government benefit applicant. It is important to maintain control over the estate, as the assets are typically used to distribute supplement funds to the applicant. In order to properly plan for debilitating diseases or other catastrophic events that will prompt the need for public benefits, it is wise to contact an elder law attorney, such as Austin probate lawyer Farren Sheehan, for help drafting a Special Needs Trust.
Assets Held in the Special Needs Trust
Special Needs Trusts can hold a variety of assets. Assets that are usually placed in the trust include: bonds, stock, real estate, mutual funds, life insurance proceeds, personal injury settlements, or the assets of the parents of a disabled child.
Requirements of a Special Needs Trust
A Special Needs Trust is generally set up for a person who is under the age of 65 and who qualifies as disabled. The Beneficiary of the trust cannot control the assets in the trust (the beneficiary of the trust cannot have more than $2,000 to qualify for Medicaid or SSI). A Trustee manages the trust and can distribute property to the beneficiary pursuant to the trust terms.
The benefit of this arrangement is that the property being held in the Trust does not count against the applicant for potential public benefits such as SSI or Medicaid. Often, families in Austin, Pflugerville, Cedar Hill, and Round Rock will need an Austin estate planning attorney to assist with the overall planning structure for a disabled loved one. There are numerous considerations, including what provisions should be provided for in the trust for the disabled individual, as well as guidance on helping the individual obtain services and items over and beyond what government benefits might provide.
Use of Funds in a Special Needs Trust
One of the primary goals of individuals who establish a Special Needs Trust is to maintain a high quality of life for the disabled loved one. While the trusts are not created to provide basic support, they are used to provide items and comfort that are not provided for by public benefits. Funds in the trust can be used for many things, including:
- Entertainment, such as movies
- Trips and vacations
- Summer camps
- Vehicles for transportation
- Medical and dental expenses
- Spending money
- Electronics and computers
Expenses That Should Not be Paid Out of a Special Needs Trust
While a Special Needs Trust provides for great latitude in distribution of funds for the disabled individual, there are several items that should not be paid without first consulting an elder law attorney, including: groceries or food items, property taxes, rent or mortgage payments, utilities, and cash or checks given directly to the trust beneficiary.
Who Can Act as Trustee?
The Trustee of a Special Needs Trust can be a private professional trustee, a trusted advisor, a family member, or a friend. The Trustee will need to obtain an Employer Identification Number from the IRS, as the Trust is legally considered a separate entity and is not registered under the beneficiary’s or grantor’s social security numbers.
Special Needs Trusts can be complicated, although they are arguably the most important estate planning document for families with disabled children or other loved ones. It is vital to have a comprehensive and integrated estate plan if you are attempting to plan for a disabled person. Having an attorney in Travis County can help alleviate the anxiety of “How do we take care of our loved one after we are gone?”
Contact Sheehan Law, PLLC with Your Questions
If you have any questions about special needs trusts, estate planning for disabled persons in Texas, or anything else regarding probate law, please do not hesitate to contact us by phone at (512) 640-0588 for an initial consultation. Other contact information is listed in the upper right-hand area of this page, and a contact form is also available on our contact page.