Planning for the future of a loved one with a disability can feel overwhelming. Families want to provide financial support, but direct gifts or inheritances can cause problems. Programs like Medicaid and Supplemental Security Income (SSI) have strict income and asset limits, and receiving money outright may disqualify the beneficiary.
A special needs trust (SNT) solves this problem. With guidance from a trust attorney in Tyler, families can use this planning tool to improve quality of life while helping preserve government benefits.
A special needs trust is a legal arrangement that holds money or property for the benefit of someone with a disability. The trust allows funds to be used for supplemental needs, things that government benefits don’t cover, without pushing the beneficiary over eligibility limits.
For example, if a parent leaves their child a direct inheritance, it could cause the child to lose Medicaid. If the same inheritance is placed in a properly structured trust, the child can continue to receive benefits while also enjoying resources for education, recreation, and personal care. Read more in our blog, What Kind of Trust Helps a Family with Young Children?
Every trust must have a trustee, the person or institution responsible for managing the funds. This role is more than writing checks it requires ongoing attention and strict compliance with benefit rules.
A trustee is expected to:
Because an SNT may last for decades, trusteeship is a long-term duty that demands organization, patience, and careful judgment.
Many families assume a relative should serve as trustee. While this can provide comfort and familiarity, it also presents challenges. Relatives often lack training in government benefit rules, and even a well-intentioned mistake, such as paying rent incorrectly, can result in reduced benefits. The stress of balancing caregiving and trust management may also become overwhelming.
A professional trustee, such as a bank, fiduciary, or trust attorney, can bring knowledge and consistency to the role. Professional trustees typically have systems for recordkeeping, compliance, and tax reporting. They also offer neutrality when family members disagree about how to spend money.
Some families find a middle ground by naming both a family member and a professional. This allows relatives to stay involved while relying on professional oversight for complex matters.
The purpose of an SNT is to enhance quality of life, not replace public benefits. In practice, that means the trust can pay for many additional expenses.
Common examples include:
It’s important to note that distributions should usually be made directly to vendors or providers. Cash gifts to the beneficiary, groceries, or improperly structured rent payments can cause SSI benefits to decrease. A trust attorney can explain how to handle these expenses carefully.
Improperly managed trusts can create serious issues.
Benefits may be reduced or lost, taxes may become more complicated, or trust assets may be used up too quickly. For these reasons, many families choose to work with a trust attorney in Tyler when setting up or administering a special needs trust.
The attorney’s role is not to replace the trustee but to provide guidance. This includes drafting the trust document, advising on trustee selection, and assisting families in understanding which expenses are safe to cover. With the right planning, the trust can provide stability for years to come.
Planning for a loved one’s future can feel complicated, but you don’t have to do it alone. A special needs trust can be a crucial component in protecting benefits and providing peace of mind for your family. Talking with a trust attorney in Tyler is the first step toward creating a plan that meets your loved one’s unique needs. Book a consultation with Campbell Law Firm today.
References: Special Needs Alliance: “When a Family Member Serves as Trustee – Fair and Honest Is Not Enough” and Special Needs Answers: “What Can My Special Needs Trust Pay for Without Affecting My Disability Benefits?”
