protecting a special needs heir with a special needs trust

Most private retirement savings plans, such as IRAs and 401(k)s, let the owner name a beneficiary to receive the funds when they die—allowing assets to pass to their heirs without going through the probate process. In many cases, this type of arrangement is ideal. However, if you have an heir with special needs, designating them as the beneficiary of a retirement account or other asset can have devastating consequences.

People with special needs often rely on government programs such as Medicaid and Supplemental Security Income (SSI). In Texas, they may also be eligible for a wide range of other assistance programs, including Home and Community-based Services (HCS), Day Activity and Health Services (DAHS), and Community Living Assistance and Support Services (CLASS). These programs serve special needs individuals with low income and limited assets. As a result, naming your special needs heir as a beneficiary on a retirement account can jeopardize their eligibility for the support programs they count on.

Creating a Special Needs Trust

Even though you shouldn't leave a share of your retirement account to a special needs heir directly, that doesn't mean that you can't leave an inheritance for them at all. Special Needs Trusts allow you to transfer property and set aside assets for your loved one's benefit without putting their eligibility for much-needed government benefits at risk.

Also known as supplemental needs trusts, Special Needs Trusts hold property benefiting your disabled heir. Since they don't have ready access to the contents of the trust, the funds are not considered countable assets for Medicaid or SSI.

There are three main types of Special Needs Trusts: first-party trusts, third-party trusts, and pooled trusts. An experienced Special Needs Planning Attorney can help you determine which type of Special Needs Trust best meets your needs.

Schedule a Consultation With One of Our Skilled Attorneys 

Want to know more about Special Needs Trusts? Contact Ross & Shoalmire today to schedule an appointment for a free initial consultation.

Ben King
Ben King helps clients in TX and AR with estate planning, asset protection, probate, and medicaid planning.