Which Special Needs Trust is Right for Your Family?
Many people throw the term “special needs trust” around without much thought. There are actually two distinct types of special needs trusts. Each type has its own very specific set of rules to follow in order to achieve success. If you have a family member with a chronic medical condition that needs a special needs trust the first step is deciding what kind of special needs trust is appropriate.
Third Party Special Needs Trust
The most common type of special needs trust is a situation where a parent desires to set aside an inheritance or other funds for their disabled child to enhance their quality of life without losing everything to chronic medical costs. This kind of special needs trust is referred to as a third party special needs trust because the parent is creating the trust for the child with assets owned by the parent. If the assets used to create the special needs trust are owned by the beneficiary of the special needs trust then you are looking at the other type of trust. That type of trust is called a “”self-settled” special needs trust.
Self Settled Special Needs Trust
A self-settled special needs trust is funded with assets owned by the beneficiary of the trust. Common examples of how this occurs are as part of the recovery in a personal injury lawsuit or if parents failed to take advantage of the benefits of a third party special needs trust. There are two unique components to the self-settled trust. First, with a self-settled special needs trust the Texas Health and Human Services Commission must be repaid upon the death of the trust beneficiary for the Medicaid benefits it paid on behalf of the beneficiary. Second, only the parent, grandparent, legal guardian or court can establish the trust. The beneficiary cannot establish the trust. If the beneficiary’s parents and grandparents are deceased and a guardian is not already in place additional court delays and costs are required to put a guardian in place to establish the trust.
Get Help Today
This is only the beginning of our discussion on the Special Needs Trust. Attorney Richard Shea of The Shea Law Firm can help you leave a legacy for your disabled loved one to protect their quality of life even after you are no longer there to provide for them. Call (832) 592-7913 today.