Early Termination Provision Ruins a Special Needs Trust

When it comes to eligibility for government benefits like Medicaid your Texas Special Needs Trust must meet all of the legal requirements. If your Special Needs Trust does not meet all of the legal requirements, then the funds that you were trying to protect with a Special Needs Trust might end up being unprotected and having to be spent before qualifying for Medicaid or other benefits. It does not take much either, one simple mistake can torpedo an entire trust.

In one recent case a disabled adult was in injured by a hospital and received a settlement from his personal injury case. In order to continue to receive his SSI benefits a portion of the personal injury proceeds were placed into a Special Needs Trust. So far so good, right?

Well, unfortunately his Special Needs Trust included provisions for early termination of the trust. While the rest of the trust did not create a problem, the way the early termination provisions were setup it ended up violating one of the statutory requirements for a valid Special Needs Trust. So at the end of his case, the money he tried to protect to enhance his lifestyle ended up being counted as an asset that he had to spend before he could receive his SSI benefits.

Do not make the same mistake with your Texas Special Needs Trust. Remember, just because a document is called a “Special Needs Trust” does not mean it automatically works the way it should and that it meets the legal requirements. You need to review the document, know the key requirements, and make sure what your Special Needs Trust attorney gives you is actually a proper Special Needs Trust.

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Richard Shea

Richard Shea is the owner of The Shea Law Firm in The Woodlands, TX. He helps families and disabled individuals protect their life savings and obtain necessary government benefits.

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