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Garden-variety estate planning will not get the job done when you have a child with special needs. You want to provide financial security for your child’s future, but if he inherits assets directly from you when you die, he might lose his eligibility for public assistance programs like Medicaid and Supplemental Security Income (SSI). Losing those benefits could cost him far more than the amount you give him in your will or through intestacy. Estate planning laws in Texas and other states created a specialized type of trust that addresses this problem known as special needs trusts.
What You Should Know About Special Needs Trusts
A Special Needs Trust, also called a Supplemental Needs Trust, lets you arrange for some financial means for your child without jeopardizing his access to government benefits. A Texas special needs trusts lawyer can help you set up a Special Needs Trust for your child. Before you do so, here are five things you need to know about Special Needs Trusts (SNT) in Texas:
- If you are planning on giving your child a mere $2,000 or less through your will or intestacy, this act can cause him to lose his government benefits. If his total assets are more than $2,000, including what he already had and what he inherits from you, he will lose his eligibility for Medicaid and SSI.
- When your child eventually dies, the government will get to claim the remaining assets in the Special Needs Trust to reimburse itself for all the public funds they gave your child throughout his lifetime. The successor beneficiaries will only get the funds left over after the government gets reimbursed. There is seldom much, if anything, left in the trust after the government reimbursement.
- An ordinary Living Trust will not accomplish what you want to achieve with a Special Needs Trust. If your standard living trust instructs the trustee to use funds of the trust for the health, welfare, and support of your child, those funds will count against the $2,000 limit.
- Your child cannot have the right to exercise any control over the Special Needs Trust. The trustee must be the one who decides how the assets of the SNT benefit your child. Your child will be the beneficiary but cannot be the trustee of the Special Needs Trust. The trust assets can only supplement the government benefits your child receives.
- The trustee can spend SNT assets on things that improve your child’s quality of life, like:
- Going to the movies, plays, and cultural experiences
- Vacations
- Eyeglasses
- Entertainment
- Phone service
- Electronics
- Dietary supplements
- Medical, dental, rehabilitative therapy, and occupational therapy
These are but a few examples of the many items and services the trustee can pay for using funds from the Special Needs Trust. For instance, if the government assistance programs provide limited or no benefits for specific services, the trustee might be able to provide those things through the Special Needs Trust.
Contact the Law Office of Carey Thompson for a consultation. Our Texas estate planning attorney can answer your questions about additional allowed expenditures, draft the Special Needs Trust document, and walk you through how to fund the trust.