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3 things to know about a special needs trust

On Behalf of | Jul 13, 2022 | Estate Planning |

One of the most beneficial aspects of executing an estate plan in Texas or any other state is the ability to personalize a portfolio to meet your specific needs. If you want to incorporate a particular document, you can. If you want to leave another one out, you can also do that, although it’s helpful to seek recommendations from someone who is well-versed in creating estate plans before determining which documents you will use. A document that is relevant to a select group of people is a special needs trust (SNT).

Do you have a beneficiary who has a disability?

Perhaps your child or other beneficiary (such as a spouse, sibling, etc.) has a disability that makes him or her eligible to receive certain government aid or financial benefits. Such benefits are typically “need-based.” If you leave an inheritance to your loved one in a last will and testament, it qualifies as “income” and could wind up causing him or her to lose eligibility for aid he or she was receiving prior to your death.

An SNT protects government benefits for the disabled

If you sign an SNT as part of your estate plan, the funds that are placed in trust are not counted toward your loved one’s eligibility to determine financial need for receiving government aid. This is because an appointed trustee, not the beneficiary, owns the money in the trust. It’s important to determine whether a first party SNT or third party SNT will best help you accomplish your estate planning goals.

No one wants to worry that a loved one will not be provided for
It can be scary to think about a time when you’ll no longer be here to take care of your son or daughter or other loved one who has special needs. It’s also understandably stressful to think that any inheritance you might leave to help provide for your loved one’s needs may, in fact, wind up causing him or her to lose much needed government benefits.

You can take comfort in knowing that there are estate planning tools available, such as a special needs trust, which will protect your loved one’s benefits while, at the same time, making it possible for you to leave him or her the gift you desire. A Texas estate plan isn’t set in stone (except for an irrevocable trust), which means you can periodically review your plan and make additions, deletions or updates, as needed.