Special Needs Trusts in Texas (Plain-English Overview)
I’m Harvey L. Cox, a Texas estate planning attorney based in Waco. This page explains special needs trusts in plain English – what they are, why they exist, and the common mistakes that can unintentionally put benefits at risk.
This is general educational information for Texas families—not legal advice.
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Quick answer: What is a special needs trust?
A special needs trust (often called a supplemental needs trust) is designed to help a person with disabilities receive support without disqualifying them from needs-based government benefits.
The key idea is coordination:
- how assets are titled
- who receives an inheritance, and
- how distributions are made.
Why families use special needs trusts
Families often explore a special needs trust when they want to:
- Leave money to a loved one with disabilities without disrupting benefits
- Give a trustee clear instructions and guardrails
- Reduce the risk of well-meaning family members “doing the wrong thing” (like naming the person directly as a beneficiary)
The most common mistake: leaving assets directly to the person
One of the most common problems I see is an inheritance left outright to a person who receives needs-based benefits.
This can happen through:
- A will or trust distribution
- A life insurance beneficiary designation
- A retirement account beneficiary designation
- A bank or brokerage account payable-on-death designation
Even when the documents are well drafted, beneficiary designations and titling can override the plan.
What a special needs trust can and can’t do (high level)
A special needs trust can help:
- Hold assets for the beneficiary’s benefit
- Provide a framework for distributions that are intended to supplement (not replace) benefits
- Put a responsible person (trustee) in charge of decisions
A special needs trust does not:
- Eliminate the need for careful, individualized planning
- Automatically fix beneficiary designations that point to the wrong place
- Guarantee eligibility (eligibility depends on facts, program rules, and implementation)
When this topic is a “red flag” (and why)
Special needs planning is one of the areas where small mistakes can have outsized consequences.
If your family is dealing with special needs planning, I strongly recommend getting individualized Texas legal guidance rather than relying on generic information.
Questions to ask (to avoid wasted meetings)
If you’re meeting with an attorney about special needs planning, here are practical questions to ask:
- Which benefits are involved (and what rules apply)?
- Which assets might be inherited, and how are they titled today?
- Which beneficiary designations need to be reviewed or changed?
- Who should serve as trustee, and who is the backup?
- What instructions should the trustee have about distributions?
When you should get individualized Texas legal advice
This page is general educational information—not legal advice. If your situation involves any of the following, you should get individualized legal guidance:
- a loved one receiving (or likely to receive) needs-based benefits
- an existing trust or settlement that needs to be coordinated
- a blended family or high conflict risk
- significant assets, business interests, or multiple properties
- uncertainty about beneficiary designations or how assets are titled
Next step
If you want a simple starting point, download my free Avoid Probate in Texas Starter Kit.
If your situation involves special needs planning, it may be best to schedule a consultation so we can discuss your facts and coordinate the plan.
Disclaimer
This website provides general educational information about estate planning and related topics for Texas families. It is not legal advice and does not create an attorney-client relationship. Legal outcomes depend on your specific facts and circumstances.