Questions About Special Needs Trust Administration? We Can Help

October 21, 2025

Parents and guardians of individuals with disabilities face unique challenges when planning for a child’s financial future. Balancing financial support and helping preserve government benefits requires careful navigation of complex regulations and trust requirements.

At Texas Gulf Bank, our Wealth Management team understands these challenges and provides specialized guidance to families in the Southeast Texas Gulf Coast region.

Our approach to special needs trust administration involves managing assets in a manner that may enhance the quality of life for individuals with disabilities without jeopardizing their eligibility for Supplemental Security Income (SSI), Medicaid, and other government programs.

We understand that establishing a trust in Texas can be a complex process, and you may have questions about how everything works. Our team can provide answers to common questions to support your family’s needs.

Understanding Special Needs Trust Administration

Establishing a Special Needs Trust (SNT) requires specialized knowledge to ensure compliance with federal and state regulations while maximizing benefits for your family member with disabilities. These trusts serve as a financial safety net, allowing individuals with disabilities to receive supplemental financial support beyond what government programs provide.

The administration process involves careful oversight of trust assets, strategic distribution decisions, and ongoing compliance with Supplemental Security Income (SSI) and Medicaid requirements. Proper administration can enhance the beneficiary’s quality of life without compromising government benefit eligibility.

To get started, let’s take a look at answers to questions you may have.

1. What Types of Special Needs Trusts Are Available?

There are three primary types of Special Needs Trusts that parents should consider, each designed for specific circumstances:

First Party Special Needs Trust: holds assets belonging to an individual with special needs, typically from inheritance, lawsuit settlements, or personal injury awards. These trusts are subject to Medicaid estate recovery upon the beneficiary’s death.
Third Party Special Needs Trust: contains assets from family members or other parties who wish to provide financial support. These trusts offer greater flexibility than a First Party Special Needs Trust and are generally protected from Medicaid estate recovery.
Court-Ordered Trust: holds funds awarded through legal proceedings or court settlements. These trusts require judicial oversight and follow specific court-mandated guidelines for administration.

2. How Does SNT Administration Affect Government Benefits?

The proper administration of special needs trusts is crucial for preserving SSI and Medicaid eligibility. The Social Security Administration carefully evaluates trust distributions, and improper payments can result in reduced or eliminated benefits.

For example, trust administrators must understand the difference between permissible and prohibited distributions:

Payments for food and shelter may reduce SSI benefits by up to one-third.
Payments for medical care, education, transportation, and personal items typically do not affect benefits.

Proper administration also requires keeping up with any changes that may affect rules. One recent instance was introduced in September 2024. The Social Security Administration removed food from in-kind support and maintenance (ISM) calculations, allowing trusts to pay for groceries and meals without reducing SSI benefits.

3. What Expenses Can a Special Needs Trust Cover?

Special needs trusts can pay for a wide range of expenses that improve the quality of life for individuals with disabilities. Permissible expenses include medical and dental care not covered by insurance, therapeutic equipment, education and training programs, transportation, and personal care services.

Trusts can also fund recreational activities, technology and communication devices, clothing beyond basic needs, and home modifications for accessibility. The key is ensuring these payments supplement rather than replace government benefits.

However, direct payments for food and housing require careful consideration. While food payments no longer affect SSI benefits, housing payments may still reduce benefits if not structured properly.

4. How Can Families Navigate Recent Changes to SNT Rules?

Recent regulatory changes have created new opportunities for families to optimize their special needs planning. The removal of food from in-kind support and maintenance calculations allows trusts to cover grocery expenses, meal delivery services, and restaurant meals without impacting SSI benefits.

For housing expenses, families can explore strategies involving ABLE accounts (Achieving a Better Life Experience accounts) to minimize SSI reductions. ABLE accounts can pay housing expenses without affecting benefits when used properly, and trust funds can be used to fund these accounts.

Our Wealth Management team can help families understand how these changes affect their specific situations and implement strategies to maximize benefits while maintaining compliance with all regulations.

5. What Role Does Texas Gulf Bank Play in SNT Administration?

Our Wealth Management Department provides comprehensive SNT administration services for families throughout the region. We can serve as corporate trustees, offering professional oversight and experienced management of trust assets. Our services include:

Coordinating with your attorney to establish the appropriate trust structure.
Providing ongoing administration and compliance monitoring.
Implementing distribution strategies that may maximize benefits while preserving government assistance.
Offering periodic trust reviews to ensure your trust remains aligned with current regulations and your family member’s changing needs.

Additionally, we are prepared to work closely with legal and tax advisors to ensure integrated estate planning that addresses all aspects of your family’s financial security and peace of mind.

Supporting Your Family’s Long-Term Security

Special Needs Trust administration requires ongoing attention to regulatory changes, benefit requirements, and your family member’s needs. Professional administration ensures compliance while maximizing the trust’s ability to enhance the quality of life for individuals in your care.

At Texas Gulf Bank, we understand the importance of providing reliable support for your child while preserving access to essential benefits. Our experienced team provides the expertise and personalized service necessary to navigate these complex requirements successfully.

Contact our Wealth Management Department today to discuss how we can help you establish or administer a Special Needs Trust. Our caring and knowledgeable team can help you find a solution that works for your family.

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not insured by the FDIC;
not a deposit or other obligation of, or guaranteed by, the bank;
subject to investment risks, including possible loss of the principal amount invested.