Creating A Special Needs Trust?

Our Austin Trust Attorney Is Here To Help

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 and other long-term care costs. However, if you want to leave money or property to a disabled relative, then you must plan carefully. Failing to do so could threaten your relative’s ability to receive Supplemental Security Income (SSI) and Medicaid benefits. The organization of a special needs trust within your will can help you eliminate this problem. However, you will need someone to maintain control over the estate and distribute supplemental funds to your relative. Since your relative will have no control over the money, SSI and Medicaid administrators will ignore the trust property when determining program eligibility. Our attorneys will help you protect your relative by drafting a special needs trust.

At Sheehan Law, PLLC, we have over fifteen years of experience handling estate planning, real estate and probate law. Our primary goal is to help you develop a well-crafted estate plan that meets your current and future needs. Frequently, Texans with disabled relatives will seek the guidance of an attorney who can draft a special needs trust. Our attorneys have experience with this aspect of estate planning law and will protect your relative from undue harm. Depending on the circumstances, special needs trusts can be extremely complex. It is vital to have a comprehensive and integrated estate plan if you are planning for your disabled relative. You never know when your relative’s condition could worsen, prompting the need for public benefits. Therefore, you should contact an elder law attorney, like Austin probate lawyer Farren Sheehan, when drafting a special needs trust.

What Are The Requirements Of A Special Needs Trust?

A special needs trust is typically created for a person who is under sixty-five years old and qualifies as disabled. The beneficiary of the trust cannot control the assets in the trust. A trustee will manage the trust and can distribute property to the beneficiary pursuant to the trust terms. You should know that your relative cannot have more than $2,000 in countable assets to qualify for government assistance. This is why you must set up a special needs trust to help protect your disabled relative’s financial future. When discussing a special needs trust, it is important to know the difference between a “self-funded” and “third-party” trust. With a self-funded trust, the assets placed in the trust already belong to the beneficiary. With a third-party trust, the assets placed in the trust belong to someone other than the beneficiary.

In Texas, there are no special statutory requirements for a special needs trust. When discussing the requirements for this trust, we are referring to the requirements needed to protect Medicaid/SSI eligibility. For a self-funded trust, the assets of your relative must be used to form all or parts of the trust. The assets must be put into the trust before your relative turns sixty-five years old. Also, the state will collect all amounts remaining in the trust after your relative’s death. However, the state can only collect an amount equal to the total medical assistance given for your relative’s care. For a third-party trust, none of your relative’s assets can be used to form the trust. Also, there is no age or payback requirement for the creation of a third-party trust. The grantor will decide who receives the remaining funds.

How Can The Funds In A Special Needs Trust Be Used?

While a special needs trust is used for a specific purpose, it can hold a variety of assets. Assets that are commonly placed in a trust include: bonds, stock, real estate, mutual funds and life insurance proceeds. However, these funds must be spent appropriately in order for your relative to receive SSI and Medicaid benefits. A special needs trust can only pay for comforts and luxuries that are not paid for through government assistance. If money from the trust is used for food or shelter, then it could count as income for your relative. This would affect his or her eligibility for SSI and Medicaid benefits. You must pick a trustee who has knowledge of Texas trust laws and uses discretion when distributing trust funds in order not to negatively affect your loved one. Our elder law attorneys will help you choose a trustee and ensure that your relative is in good hands.

Although determining a trustee is important, your beneficiary must know how the funds in a special needs trust should be used. For example, trust funds can be used for activities like: rehabilitation, therapy, entertainment, insurance and counseling. The primary goal of a special needs trust is to maintain a high quality of life for your disabled relative. Trust funds must be spent on items that provide comfort and leisure and are not taken care of through public assistance programs. Most trust funds provide great latitude in the distribution of funds for your disabled relative. However, there are several items that should not be paid for without first consulting an elder law attorney. They include: groceries, property taxes, mortgage payments, utilities and cash or checks given directly to the trust beneficiary. Our attorneys will help you determine if a purchase can be made under Texas trust law.

Disabled Relative? Contact An Austin Trust Attorney Today

While worrying about a disabled relative is natural, you should not have to worry about his or her financial future. By creating a special needs trust, you can help guarantee that your relative will receive the proper amount of support. Contacting an Austin trust attorney will give you peace of mind and allow your relative to have more financial freedom.

If you have any questions about creating a special needs trust, then you should contact Sheehan Law, PLLC today at (512) 355-0155 and schedule a consultation. You can also contact us online and tell us about your estate planning needs. We promise to review your information and look forward to meeting with you soon.