If your mother has NOT reached the age of 65 and is disabled, she can transfer all of her money into a self-settled special needs trust (SNT). These trusts have the following rules and provisions:
- Assets cannot be added after she reaches the age of 65.
- This trust must be irrevocable (which means unchangeable) and established by a parent, grandparent, legal guardian, or court.
- The State of Texas will be the beneficiary of this trust upon your mother’s death.
- The trust can only make distributions for your mother’s benefit.
- The trust cannot make payments to providers of food or shelter.
- The following are examples of allowed payments:
- Personal services
- Medical expenses not paid by public benefits or insurance
- Vehicle and transportation expenses
- Entertainment expenses
- Educational expenses.
The Pooled Self-Settled Trust
A self-settled pooled special needs trust (SNT) is a trust that is funded by your mother but is managed by a non-profit. Usually, these trusts have reduced maintenance fees that make them more efficient than other options. Each trust has a sub-account, maintained and invested by the non-profit. These trusts have the following rules and provisions:
- The account can only be used for the benefit of your mother.
- If your mother is 65 or older, then the transfer penalty will apply to any transfers, not for your mother’s benefit. For example, let’s say your mother is over 64, and money is transferred into her self-settled pooled SNT. If some of the money is used to purchase a plane ticket for you, then the amount spent on the ticket will be subject to the transfer penalty.
- The State of Texas will be the primary beneficiary of the trust upon your mother’s death.
- Certain pooled trusts have already been set up and approved by HHSC in Texas. The Arc of Texas operates different trusts that can be established without the services of an attorney.