People in Texas usually think about wills when they hear about the need to do estate planning. However, trusts are also important components of estate plans. One type of trust that is particularly valuable for parents whose children will have lifelong special needs is the special-needs trust.
The special-needs trust is also known as the supplemental-needs trust. It is a tool designed for parents whose children will most likely require financial support and special care in the future. This type of trust allows parents to address the challenging dilemma of how to pass on their assets to their disabled children while not jeopardizing their children's eligibility for government benefits that are means tested, such as Supplemental Security Income, Medicaid and Medicare.
A disabled person who has just $2,000 in assets available might not have eligibility for public benefits. However, any assets that are held in a special-needs trust do not count toward a disabled person's eligibility calculations for these types of benefits. A special-needs trust is managed by an assigned trustee.
Funds in special-needs trusts can easily be utilized to pay for things that government programs do not cover, such as caregiver charges, haircuts, eyeglasses and dental work. These funds may also be used for specialized education programs for the disabled and for allowing the disabled to visit his or her family members. Essentially, the special-needs trust is created to help parents to provide a higher quality of life for their disabled children. Proper legal guidance may help people in Texas to effectively establish special-needs trusts or other types of trusts according to their unique goals.
Source: cnbc.com, "Special-needs trust is key part of some estate plans", Anna Robaton, June 1, 2016