If you have a special needs individual in your family then you likely already know there are numerous challenges involved in caring for someone with special needs. Often, those challenges are financial. Unless you are operating with extremely deep pockets, there is a good chance that your special needs family member will need to depend on assistance from one or more of the federal and state assistance programs. Qualifying for those programs, however, can get tricky if your special needs loved one has any assets or property in his or her name. One way to ensure that your loved one will not lose eligibility for much needed assistance as a result of assets or property that he or she owns is to create a first party special needs trust.
Any assistance programs, such as Supplemental Security Income, or SSI, and Medicaid have both income and asset limits. In order to retain eligibility, a recipient’s income and assets cannot exceed those limits. This can create a problem if a parent or grandparent wishes to financially supplement the assistance provided by these programs. Specifically, it creates a problem if a well-meaning family member leaves a gift to a special-needs individual in his or her Last Will and Testament. This is where a special needs trust in Houston Texas can help. A parent, for instance, can create a special needs trust and then transfer the gift intended for a special needs child into the trust. This type of special needs trust is known as a third-party trust because it is funded by a third-party. What happens, however, if a grandparent or other well-meaning loved one is unaware of the problems created by a gift and leaves money or assets to a special-needs individual? A special-needs trust may still be able to help. In this case you will need to create what is known as a first party special needs trust.
A gift is not the only way a problem can arise. A divorce settlement, a retirement plan, proceeds of life insurance, or a personal injury award can also find a special-needs individual with too many assets to qualify for much-needed assistance. While a first party special-needs trust may be able to help it is important to understand that there are very specific rules and very precise language that is required for a trust to be considered a special needs trust for purposes of eligibility for federal assistance programs. Moreover, there is more than one kind of first party special-needs trust and the laws regarding trust creation can vary from one state to another. For these reasons it is essential that you consult with your estate planning attorney in Houston Texas if you think that a special needs trust can help your special-needs loved one.
Stephen A. Mendel, Estate Planning Attorney
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