From the moment your child is born, you want to care for them and protect them. This sentiment never really ends, even after your child becomes an independent adult with their own life. If your child has special needs, you will want to ensure they receive care and support for the rest of their lives, which could be long after you're gone.

Thousands of children, and one in four adults in Texas, live with physical, mental, and emotional disabilities that affect their mobility, cognition, hearing, vision, and their ability to live and care for themselves independently. Their needs don't end when you can no longer care for them. A special needs trust can help.

Redding Law Office is passionate about helping families with a broad range of estate planning matters, including special needs trusts. The Redding Law Office serves clients in Southlake, Texas, Tarrant and Denton counties, and in Flower Mound, Keller, and Colleyville.

What Is a Special Needs Trust?

A special needs trust is a legal agreement that provides long-term financial support for a child or adult with special needs without making them ineligible to receive income-based support such as Medicaid and Supplemental Security Income (SSI).

Medicaid is funded jointly by the federal and Texas state government. It provides health coverage for low-income and disabled children and adults. SSI, administered by the Social Security Administration, provides assistance for food, clothing, and housing for the elderly, blind, and disabled who have very little income and resources.

Because both are income-based programs, if your child receives income through gifts, inheritance, personal injury settlements, or other sources, they risk losing Medicaid and SSI. A special needs trust holds the beneficiary's property and distributes money to supplement rather than replace these income-based benefits. Trust funds cannot be used for paying a rent or mortgage or buying groceries; however, they can be used to pay for things such as utilities, home care, rehabilitation services, assistive devices, vacations, education, and training.

There are two types of special needs trusts. A self-settled trust lets your child put any money they receive directly into it-for example, if a grandparent left them an inheritance or if they received a personal injury settlement.

A third-party trust is funded by people other than the beneficiary from sources such as your life insurance policy or money a relative wants to provide for the care of your child.

A special needs trust is managed by a trustee. The trustee could be a member of the family, a friend, or a professional who manages trusts. If the trust is funded by a single donor, that donor can serve as trustee if they so choose.

What Is an ABLE Account?

An ABLE account also provides a way for disabled adults to retain more assets while retaining their Medicaid and SSI benefits. Medicaid recipients may have no more than $2,000 in cash savings to maintain coverage. A Texas ABLE account allows them to have up to $370,000 in savings and still retain Medicaid benefits. An account holder can have up to $100,000 in an ABLE account and $2,000 in other assets and still receive SSI benefits.

Annual contributions to a Texas ABLE account may not exceed $14,000 in total. Contributions may include the disabled person's wages or contributions from family and friends. The disabled person may use the account to pay for disability-related expenses including housing, education, legal fees, employment support and training, transportation, and other qualified expenses.

Anyone diagnosed with a significant disability prior to age 26 is eligible to open an ABLE account. Those already receiving SSI or SSDI benefits automatically qualify.

Which One Is Right for Us?

You should talk to an estate planning attorney who handles special needs trusts to determine which option will work best for you and your child. It could be that your child will benefit from both a special needs trust and an ABLE account.

One of the advantages to a special needs trust is that it allows for assets in excess of the maximum amounts allowed in ABLE accounts. ABLE accounts and self-settled special needs trusts are subject to Medicaid repayment upon your child's death. Medicaid has the right to recoup what they paid on behalf of any beneficiary when they die so long as the assets belonged to the beneficiary. The assets in a third-party special needs trust belong to the trust, not to the beneficiary; therefore, there is no obligation for the trust to repay Medicaid upon the beneficiary's death.


If you have a disabled child, a special needs trust should be part of your comprehensive estate plan. Although the options and requirements may appear confusing, an experienced estate planning attorney can provide the guidance you need. Southlake attorneys at Redding Law Office can help you explore your options and put into place the tools that can benefit your child. All you need to do is schedule a time to talk. Call the Redding Law Office today.