Special Needs Trust; What’s So Special? (continued)

This is a follow-up to an earlier post on the subject of special needs trusts.  If you need an attorney in Collin County, Texas, or the north Dallas area to help you with issues related to a special needs trust, please call my office for an appointment.

1. Who can be the trustee of a special needs trust?

Normally there are no special requirements for being the trustee of a special needs trust. In most cases, a family member is selected to be the trustee.  However, the responsibility of a trustee of a special needs trust is significantly greater than that of a trustee of a regular revocable trust. This is because the trustee of a special needs trust not only has to follow the duties of being a trustee as found in the law (in Texas in particular in the Probate Code §§113.051 – 113.060), but they also must keep current with the ever-changing laws of public benefits, namely the Social Security Act law and regulations and the Program Operations Manual System (POMS).  Being the trustee of a special needs trust is not something to take on casually. Oftentimes people setting up a special needs trust will select a professional/corporate trustee to handle the trustee’s role.

2. What happens if a special needs trust is not created for my disabled child?

As long as the child’s income and assets are in compliance with the requirements of the public benefits he or she is receiving, they should be fine.  However, if for some reason they receive something of value, they might be disqualified for some period of time from receiving those public benefits.  For example, if when you die you leave an inheritance to your disabled child, that will most likely disqualify them from receiving needs-based public benefits at least for some period of time unless the inheritance is paid into a special needs trust.

3.  Are amounts I contribute to my child’s special needs trust tax-deductible for me?

No.

4.  Does my disabled child have a right to require money be given to him from the special needs trust?  If my disabled child has creditors, can they obtain payment from the special needs trust?

The answer to both these questions is no.  In order to obtain the special benefits of a special needs trust, the trust is intentionally established to give the trustee the discretion as to whether payments are to be made.  Certainly guidelines may be suggested to the trustee, but neither the beneficiary nor the beneficiary’s creditors may compel any distribution from the trust.

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