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Special Needs Wills and Trusts: How to Get Started

February 20, 2024

Planning for your family’s future is always a smart decision. And, if you have a child or a loved one in your family with special needs, it is essential to create a thorough financial plan that provides for their future needs.

Establishing a financial and legal plan of action now can help prevent future financial hardships or disruptions in care. Learn more about the process of creating special needs wills and trusts, as well as how to protect the financial resources and government benefits of your loved ones.
Also, discover how the Wealth Management team at Texas Gulf Bank may be able to assist you through each step of creating a will and trust for your loved one.

How Special Needs Wills and Trusts Help Texas Families

For families that care for a child with special needs or a relative with a disability, a significant amount of time, energy, and financial resources may be required.  This is especially true if they need medical care or regular therapies.

To ensure your loved one always has access to the highest levels of care possible throughout their life, a special needs will or trust can help maintain the ideal standard of care and treatment.

The key purpose of creating a special needs trust or will is to formalize two key decisions made for financial management and future care. Without clear-cut trust documents in place, your child or relative with special needs may be at risk of having their financial resources mismanaged or having no one to help protect their long-term access to quality health care and services.

When you create a standard will or trust, you dictate exactly how you want your own personal financial resources to be distributed now and to your estate upon your death or incapacitation.

In addition, special needs trusts can also be used to outline exactly how your loved one’s personal wealth and financial resources should be managed if they are unable to do so, or if there is a future change in caretakers.

A will is especially helpful if you currently care for a child with special needs or loved one who is  disabled and need to designate a guardian or conservator to oversee their future care after your death. This is designed to ensure care continuity and long-term protection for your child with special needs, which may also provide peace of mind for your entire family.

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Types of Special Needs Trusts to Consider

There are multiple types of special needs trusts available. Learn about the advantages of each one to benefit children with special needs or individuals with disabilities.

First-Party Trusts

A first-party trust may be created for individuals with special needs or disabilities to oversee all financial assets, such as personal injury settlements, a family inheritance, real estate holdings, court damages, or other personal holdings.

This type of trust is an ideal option for individuals who are under 65 with a disability or special needs but are capable of making medical and legal decisions on their own.

The key advantage of a first-party trust is that it allows individuals with special needs or disabilities to preserve their financial assets for long-term supplemental needs without putting any current or future government benefits at risk.

However, upon the beneficiary’s death, payback provision rules dictate that any remaining funds in the estate must be used to repay the government for the benefits received. 

Third-Party Trusts

A third-party trust is established by the guardians, family members, or third-party conservators of a person with special needs or disabilities who cannot make legal or medical decisions for themselves. The trust is intended to protect all assets held in the trust, such as real estate, cash, inheritance money, investments, or life insurance disbursements.

Any person can fund the trust – such as parents, grandparents, siblings, or godparents. In addition, third- party trusts may receive contributions throughout the lifetime of the beneficiary as financial needs may arise.

Unlike first-party trusts, a third-party trust does not require any payback provisions upon the beneficiary’s death, so any remaining assets may be distributed to surviving family members or specific charities.

In addition, a third-party trust enables individuals with disabilities or special needs to remain eligible for future government benefits such as Supplemental Security Income (SSI) or Medicaid. 

The Benefits of Special Needs Trusts

Establishing a Special Needs Trust for an individual with special needs or disabilities provides important advantages – both for the individual and their parents/guardians who want to protect their level of care. The key benefits include the following.

Asset Protection

A special needs trust protects the finances of the beneficiary from potential fraud, exploitation, mismanagement, or outside creditors. This assurance gives individuals and their caregivers a level of comfort, knowing financial resources may be better protected and available for long-term needs.

Funding For Supplemental Needs

The funds put into a Special Needs Trust can help cover the supplemental needs of people with special needs or disabilities above and beyond what government programs and public benefits provide. Trust funds can be used to cover additional medical expenses, therapies, education, transportation, and more.

Preserving Government Benefits

Government programs like Medicaid or Supplemental Security Income (SSI) are intended to help cover essential medical expenses and daily living costs for children with special needs or individuals with disabilities. However, families often fear leaving behind an inheritance or valuable assets that could jeopardize the individual’s eligibility for government benefits.

The primary advantage of special needs trusts is that they allow people with disabilities or special needs to retain Medicaid or Social Security benefits for their care, while also benefiting from financial assets managed by the trust. 

Professional Guidance

Setting up a special needs trust may seem complex since it incorporates many legal and financial decisions. Working with financial advisors, a special needs trust attorney, and an estate planning attorney is essential to help ensure the trust is structured correctly.

With the right resources and expert guidance, your family can be re-assured that the immediate and future care of your special needs child or a person with a disability should be protected. 

Contact Texas Gulf Bank Today About Special Needs Trusts

If you’re a parent, guardian, or third-party individual in need of a Special Needs Trust for a person with special needs or disabilities, Texas Gulf Bank is ready to help. Our Wealth Management Department can provide you with valuable resources and expert guidance for establishing and overseeing special needs wills and trusts.

For family members and guardians in need of establishing a Texas Special Needs Trust, our bank is able to serve as a trustee to assist with overseeing the trust property and securing the administration of funds.

If you need assistance establishing a third-party special needs trust, Texas Gulf Bank partners with CPAs and estate planning attorneys to create dependable trusts that align with your client’s specific goals and financial needs.

Contact the Wealth Management team at Texas Gulf Bank to learn more about our Special Needs Trust services. We are ready to help you protect the financial future of your loved ones.

Notice: Wealth Management Department Investments include non-deposit investment products which are:

  • Not bank deposits 
  • Not FDIC insured
  • Not insured by any federal government agency
  • Not guaranteed by the bank 
  • May decrease in value