If you’re caring for a loved one with a disability, you already know how much thought and planning goes into every part of life—both now and down the road. When it comes to long-term financial security, a Special Needs Trust (SNT) can be a powerful tool to protect their future without putting government benefits at risk.
Here in Texas, setting up a Special Needs Trust isn’t just about money—it’s about providing care, dignity, and stability for someone you love. Let’s walk through what a Special Needs Trust is, why it matters, and what you need to know to create one properly under Texas law.
What Is a Special Needs Trust?
A Special Needs Trust (sometimes called a supplemental needs trust) is a legal arrangement designed to hold and manage assets for a person with a disability without affecting their eligibility for needs-based government programs like SSI (Supplemental Security Income) or Medicaid.
In other words, it allows your loved one to receive financial support for things like medical expenses, therapy, education, personal care, and quality-of-life items without disqualifying them from essential public assistance.
Why a Special Needs Trust Is So Important
Programs like SSI and Medicaid have strict asset limits—usually just $2,000. That means if a person with a disability receives an inheritance, settlement, or even a generous gift, they could lose their benefits unless those funds are properly protected.
We’ve worked with families across Texas who didn’t realize that leaving money directly to a child or adult with special needs—through a will or life insurance—could unintentionally jeopardize their care.
A Special Needs Trust solves this problem by keeping the assets out of the beneficiary’s direct control while still using them to enhance their life.
Types of Special Needs Trusts in Texas
There are two main types of SNTs commonly used in Texas:
1. First-Party Special Needs Trust
Funded with the beneficiary’s own money—often from a personal injury settlement or inheritance.
- Must be set up before the beneficiary turns 65
- Can only be established by a parent, grandparent, legal guardian, or the court
- Must include a provision to repay Medicaid upon the beneficiary’s death
2. Third-Party Special Needs Trust
Funded with assets from someone else—like a parent, grandparent, or other loved one.
- Common in estate planning
- No Medicaid payback requirement
- Can be created while the grantor is still alive or through a will or trust after death
Third-party SNTs are especially helpful for parents who want to leave money or life insurance to a child with special needs without affecting benefits.
What Can a Special Needs Trust Pay For?
Funds in the trust can’t be used for basic food or shelter without impacting benefits—but they can be used for almost everything else that improves the person’s life.
That might include:
- Personal care attendants
- Medical and dental expenses not covered by Medicaid
- Special therapies or treatments
- Education or training programs
- Transportation and travel
- Computers, internet, and electronics
- Recreational activities and hobbies
The goal is to supplement—not replace—government support, and to give your loved one a better quality of life.
Legal Requirements for Setting Up a Special Needs Trust in Texas
To be valid and effective, a Special Needs Trust must:
- Clearly state that its purpose is to supplement government benefits
- Appoint a reliable trustee to manage and distribute the funds (not the beneficiary)
- Meet all federal and Texas Medicaid rules
- Contain appropriate language to avoid disqualifying the beneficiary from benefits
- Be properly funded and coordinated with other parts of your estate plan
This isn’t something to DIY with a generic online form. These trusts are highly technical and must be drafted carefully to comply with federal and state law.
Who Should Consider a Special Needs Trust?
You may need an SNT if:
- You have a child or adult family member with a physical or developmental disability
- You plan to leave an inheritance or life insurance to someone receiving Medicaid or SSI
- You’re managing a legal settlement for an individual with special needs
- You want to ensure long-term care and oversight for a loved one
Even if your loved one isn’t receiving public benefits yet, creating a trust now can prepare for the future and provide critical structure and support.
How The Greg Hall Law Firm Can Help
We know how personal—and emotional—this type of planning can be. At The Greg Hall Law Firm, we offer virtual assistance to help families across Texas prepare the documentation needed to set up or support a Special Needs Trust.
We can:
- Draft trust documents under attorney guidance
- Help you organize supporting materials
- Assist with beneficiary planning and coordination with other estate documents
- Work hand-in-hand with your trust attorney or connect you to one if needed
Our goal is to make the process clear, compassionate, and as stress-free as possible—so you can focus on what really matters: your loved one’s future.
Planning Today for a More Secure Tomorrow
A Special Needs Trust isn’t just a legal tool—it’s an act of love and foresight. It ensures your loved one will be cared for, protected, and supported, even when you’re no longer there to advocate for them.If you’re ready to start planning or have questions about setting up an SNT in Texas, visit www.greghalllaw.com. We’re here to walk with you every step of the way, virtually and affordably.
