Medicaid Planning & Special Needs Trust Attorney in Austin, Texas

Medicaid planning and special needs trust drafting are subspecialties within estate planning that require knowledge of both Texas and federal law. The stakes are high: an inheritance received without a properly structured trust can eliminate a person's Medicaid coverage and SSI benefits immediately. An SNT drafted without the right provisions can fail at the moment it's needed.

Special needs trusts come in two primary forms. First-party special needs trusts (also called self-settled trusts or d4A trusts) are funded with the beneficiary's own assets — often a personal injury settlement, an inheritance, or an accumulated asset. Third-party special needs trusts are funded by someone other than the beneficiary — parents or grandparents planning ahead for a child with disabilities.

The critical distinction between the two types involves Medicaid payback requirements. A first-party SNT must include a provision requiring that any assets remaining in the trust at the beneficiary's death be used to reimburse Medicaid for benefits paid during the beneficiary's lifetime. A third-party SNT has no such requirement — the remaining assets can pass to other beneficiaries at the trust holder's death.

Texas Medicaid (administered through the Health and Human Services Commission) has both income and asset eligibility limits. The Qualified Income Trust (QIT or Miller Trust) is required when a Medicaid applicant's income exceeds the eligibility limit — it channels the excess income through the trust to maintain eligibility. Medicaid planning attorneys structure these tools to maintain eligibility while preserving quality of life.

For families with children who have developmental disabilities, special needs trusts are often paired with ABLE accounts (Achieving a Better Life Experience accounts) — a tax-advantaged savings vehicle that also does not affect government benefit eligibility. The combination of an SNT and ABLE account provides maximum flexibility.

We connect Austin families who need Medicaid planning or special needs trust drafting with attorneys who focus on this area. The drafting mistakes that appear in generic estate plans — failing to include the right Medicaid payback language, failing to restrict trustee distributions appropriately — can have consequences that only appear years later when benefits are denied.