The diversity of estate planning tools available for Texans is vast, and without guidance, it can be difficult to figure out which tool works best for your individualized needs and goals. One specific tool that might be useful for you or a loved one is called the special needs trust. In today’s blog, we review the special needs trust – its advantages, its implications, and important tips to keep in mind if you are thinking about pursuing this trust for someone in your life.
The special needs trust is an irrevocable trust that benefits a physically or mentally disabled individual. The money put in this kind of trust is untouchable to creditors and lenders, and it is managed by a trustee who controls the trust’s assets. Under the law in Texas, the trustee cannot give the trust’s beneficiary money directly from the trust, but he or she can instead use the money to cover the beneficiary’s education, medical needs, and services that might be needed to help the beneficiary navigate his or her disability.
One important advantage of the special needs trust is that the money in the trust does not contribute to the beneficiary’s income for purposes of Social Security Income (SSI). If a disabled person wants to receive these benefits, he or she cannot have more than $2,000 to his or her name. With the special needs trust, however, the amount of money held in the trust has no bearing on this $2,000 maximum. The trust therefore allows these beneficiaries to both receive SSI and, at the same time, keep money in the special needs trust.