Understanding the Basics of a Special Needs Trust

 Posted on August 04, 2023 in Estate Planning

TX trust lawyerA special needs trust (SNT) is a crucial legal tool designed to provide for individuals with disabilities while preserving their eligibility for government benefits. It ensures that individuals with special needs receive the financial support they may require in a thoughtful and structured manner. Today, we will explore the fundamentals of a special needs trust, its importance, and some key considerations when establishing one. To see if a special needs trust may be suitable for a loved one, contact an estate planning attorney to learn more about what such trusts entail.

Defining a Special Needs Trust

A special needs trust is a legal arrangement where a trusted individual or entity, known as a trustee, is designated to hold and manage assets on behalf of a person with special needs, known as a beneficiary. The primary objective of an SNT is to supplement the government benefits the individual may receive without jeopardizing their eligibility for programs such as Medicaid and Supplemental Security Income (SSI).

Preserving Government Benefits

Government benefits for individuals with special needs are often means-tested, meaning eligibility is based on financial need. If an individual receives a direct inheritance or gift, their eligibility for these programs could be seriously compromised. However, placing assets into a special needs trust ensures that the funds are not considered assets owned by the beneficiary, thus maintaining their eligibility for essential government benefits.

What Kind of Special Needs Trusts Are There?

There are two main kinds of special needs trusts. These are:

  • Third-party special needs trust – Established by a third party, such as a parent or grandparent, to benefit the individual with special needs.
  • First-party special needs trust – Funded with assets owned by the beneficiary with special needs, often through a personal injury lawsuit settlement or an unexpected inheritance.

Key Considerations

When establishing a special needs trust, there are several crucial considerations to keep in mind:

  • Selecting a trustee – It is essential to choose a trustee capable of managing and distributing funds and understanding the unique needs of the beneficiary with special needs.
  • Drafting the trust document – The trust document must be drafted meticulously, taking into account important details such as the beneficiary’s needs, the purpose of the trust, and the provisions for successor trustees.
  • Regular reviews and updates – It is crucial to regularly review and update the special needs trust, accounting for changes in the beneficiary’s circumstances, as well as changes in laws or regulations that may affect the trust’s administration.

Contact a Dallas, Texas, Estate Planning Lawyer

If you are interested in establishing a special needs trust, contact the Dallas, Texas, estate planning attorney with Andrew Dunlap Attorneys, PLLC. Call 972-807-6357 for a private consultation.


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