Special Needs Trust Computer ButtonParents of children with special needs, or spouses of adults with dementia, never stop thinking about how to provide the best possible care for their loved ones. A common worry for these caregivers is what will happen to their dependents after they are gone. While government programs will provide for basic needs, there are ways to supplement that care with additional resources through a Special Needs Trust, but it must be executed properly and maintained correctly in order to be effective. Here, we explain what you need to know about Special Needs Trusts in Texas.

5 Special Needs Trust Takeaways

You would do anything to make sure your loved one is cared for after you are gone, but you don’t want to make a mistake that will do more harm than good in the long run. Here are five things you need to know about Special Needs Trusts:

  1. They can be used to supplement government benefits. A Special Needs Trust is a tool through which you can provide for your loved one without jeopardizing their need-based government benefits. An adult with autism or an elderly person with dementia can collect Medicaid or SSI to pay for their basic needs, while the trust can pay for supplemental needs such as equipment, in-home caregivers, rehabilitation, and other medical costs, as well as enriching activities such as entertainment, travel, camps, and classes. If money from the trust is used for food or shelter. However, it will be considered income, and the beneficiary could lose government benefits.
  2. Other people can contribute. Third-party trusts can be funded by anyone—parents, grandparents, siblings, or friends—and can be contributed to throughout the beneficiary’s lifetime. A Special Needs Trust can be named as a beneficiary in a will, so it’s important to tell family members to leave assets to the trust rather than directly to the person with special needs if they wish to include them in their estate plan. If the person with special needs inherits assets directly, he or she could lose eligibility for benefits.
  3. You need to pick the right administrator. The person you name as trustee should be chosen very carefully as he or she will play an important role in caring for the family member with special needs. Most importantly, the trustee should be compassionate and willing to serve in the role. He or she should also be trustworthy, informed of what can be paid for out of the trust and what cannot, willing to work with legal and tax advisors to ensure the validity of the trust, and tuned into the needs and wants of the beneficiary.
  4. Some trusts require a payback provision. First-party trusts, which are funded by the beneficiary’s own assets—such as from an inheritance, legal settlement, or insurance payout—can be used in the same way as a trust funded by family members. The person with special needs can still collect government benefits, and supplemental costs can be paid for out of the trust. However, when the beneficiary dies, the money left in the trust must be paid to the state as reimbursement for public benefits.
  5. An attorney can help you do everything right. When you work with an estate planning attorney who is experienced with Special Needs Trusts, you can be sure that everything will be set up and maintained correctly. An attorney will help you make important decisions about your loved one’s care and can continue to advise the trustee after you are gone.

If you are considering a Special Needs Trust for a child with autism or Down syndrome, or for a spouse with dementia, you have already taken an important first step. Take the next step of learning all you can about your options by meeting with an experienced estate planning attorney.

Lisa B. Shoalmire
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Attorney And Senior Partner