Protecting the Most Vulnerable Members of Your Family 

If you include a loved one with a disability in your will and you don’t plan around their government benefits, you may be putting their eligibility at risk. Estate planning is an important step in planning for your future and the future of your family members, but if done improperly, you could do more damage than good.

Special needs trusts offer the ability to plan the distribution of your wealth while also ensuring your loved one’s eligibility is never put at risk. These complex trusts require extensive planning, and the laws and regulations that govern them are strict. This means you need a special needs trust attorney to help make sure your trust is legally sound and ready to provide for your loved one.

The Hatchett Law Firm can help you through every step of estate planning, including providing for your most vulnerable family members. Our founders each have more than 30 years of legal experience, and our track record of success shows why our clients choose us.

What is a Special Needs Trust? 

Special needs trusts are a type of trust that allows you to pass your assets to a disabled loved one. Special needs trusts are often irrevocable, meaning that once they are created and funded, it is not easy to modify the terms of the trust, nor can you easily revoke the trust.

Special needs trusts are designed to help support your loved one without risking their eligibility for public benefits like Supplemental Security Income (SSI) or Medicaid. The trust holds and manages assets that benefit your beneficiaries. There are limits regarding what the trust funds can be used for. While they can pay for expenses like medical care, education, and housing, they can not use the funds for things like food and shelter.

For your special needs trust to be legally legitimate, which means your loved one’s benefits will be safeguarded, you need the help of an attorney who understands the intricacies of these complex trusts. Contact us at (281) 214-6541 to speak with a member of our team and take the first step towards caring for your loved ones with special needs.

What Kinds of Special Needs Trusts are There? 

There are three main types of special needs trusts, and each is designed to meet the needs of a disabled person without risking their eligibility for government programs.

First-Party Special Needs Trust

A first-party special needs trust is funded with the beneficiary’s own assets. These funds can be from an inheritance, a settlement from a personal injury lawsuit, or other funds in their name. This type of trust must be formed before the beneficiary turns 65 years old and has a Medicaid payback provision, meaning that any remaining funds after the beneficiary’s death must be used first to reimburse Medicaid for expenses paid on their behalf before the remainder can go to successor beneficiaries.

Third-Party Special Needs Trust 

This type of trust is funded by someone other than the beneficiary, such as parents, grandparents, or other family members. Because these funds never belong to the individual with special needs, there is no Medicaid payback requirement for Medicaid benefits used by the disabled individual. When the beneficiary passes away, assets can then be distributed to successor heirs.

Pooled Special Needs Trust 

A pooled special needs trust is a type of trust managed by nonprofit organizations that combines the assets of multiple individuals with disabilities while keeping separate records for each. This option is ideal for circumstances where there is no individual trustee who can manage the trust funds.

How Can Funds Be Used? 

The use of special needs trust funds is heavily regulated to ensure that beneficiaries do not lose their benefits by exceeding the income limit.

The funds can be used for the following without risking beneficiaries’ eligibility for their important benefits:

• Medical expenses: Cover the costs of dental care, therapy, prescriptions, and even insurance benefits that are not covered by their Medicaid benefits.
• Housing expenses: Rent and mortgage payments, utilities, taxes, and home maintenance can be paid with funds from the trust, although some payments may reduce SSI benefits.
• Transportation: The trust can cover vehicle purchases, insurance, ride-sharing services, and public transportation costs.
• Care and services: Money from the trust can be used to pay caregivers, personal attendants, and housekeepers.
• Enrichment of life: This covers things like travel, hobbies, and events meant to make the beneficiary’s life more enjoyable.

There are a few things the funds should not be used for. Using funds for any of the following may cause your loved one to lose their benefits.

• Direct cash gifts: The beneficiary should never receive direct cash payments from the trust.
• Food and shelter: Paying for groceries, rent, and utilities may reduce the amount of SSI benefits your loved one is eligible for. Proper special needs planning can avoid this.
• Non-essential expenses: The trust should not be used to pay for extravagant items unrelated to the beneficiary’s well-being.

Are You Feeling Overwhelmed? 

If all of this seems like too much to understand, you are not alone. Contact us at (281) 214-6541 to speak with a member of our team today. We will use our resources and experience to ensure your wealth is fairly passed to your loved one, that they are properly cared for, and that their benefits are never at risk.

Call now to find out how our Houston special needs planning lawyers can help you!