Special Needs Trusts

A Special Needs Trust is a trust designed to hold assets for a person with a disability without disqualifying them from means-tested public benefits like SSI and Medicaid. You need one if your child, grandchild, sibling, or other family member has a disability that qualifies them for needs-based benefits, and you want to leave them an inheritance, life-insurance proceeds, or a settlement without knocking them off those benefits. In most Texas families, the right time to set one up is the year after diagnosis, not the year before death.

Yes, and it matters a great deal. A third-party SNT is funded with someone else's money — typically a parent's or grandparent's inheritance — and has no Medicaid payback obligation. A first-party SNT (a d4A trust) is funded with the beneficiary's own money, such as a settlement or an outright inheritance that cannot be re-routed, and requires any remaining balance at the beneficiary's death to repay Medicaid for lifetime benefits received. We default to third-party whenever possible and use first-party when we have to.

For most families, both. An ABLE account is a great tool for everyday spending up to $100,000 (rising annually by the gift-tax exclusion amount), does not require a trustee signature, and is simple to use. An SNT is the structural home of a larger inheritance, permits broader types of expenditures, and has no account cap. Think of the ABLE as the checking account and the SNT as the endowment.

Not always. Texas courts are increasingly encouraging least-restrictive alternatives like Supported Decision-Making Agreements, medical and financial powers of attorney, and HIPAA authorizations before resorting to guardianship. For a child with significant intellectual disabilities and limited capacity to understand medical or financial decisions, guardianship may still be appropriate. For a child with a milder disability or one who can direct their own care with support, a less-restrictive tool is often both more respectful and legally sufficient.

Please do not let them. A direct bequest — whether in a will, a life-insurance beneficiary designation, or a POD account — can disqualify your child from SSI and Medicaid the day the check clears. The fix is straightforward: every family member who wants to leave something to your child should direct that gift into the third-party SNT instead. We help families draft language that grandparents, aunts, and uncles can drop into their own estate plans without having to rewrite everything from scratch.

Transfers to a properly drafted SNT for a disabled child are a specific statutory exception to the 60-month look-back and are not penalized. That is federal law. What is not exempt: transfers to other family members, gifts made within the look-back window, or funding a trust that is not drafted to meet the Medicaid exception criteria. We build Medicaid-aware drafting into every special-needs engagement.

The ideal structure for most Texas families is a co-trustee arrangement: a family member for judgment, love, and personal knowledge of your child, plus a professional or corporate co-trustee for administrative compliance and SSI reporting. We also help plan for trustee succession across multiple generations, because the trust needs to work long after you, and frankly long after your siblings, are gone.

A Letter of Intent is a non-legal, written document that captures everything a successor guardian or trustee needs to know about your child — their diagnoses, medications, therapies, routines, triggers, preferences, favorite foods, trusted doctors, and the life you have built around them. It is not legally binding, but it is the document everyone involved in your child's life will actually read. We sit with every family we work with and draft one. It is, in my professional and personal opinion, the most important piece of paper a special-needs family creates.