A special needs trust—also known as a supplemental needs trust—is an irrevocable trust designed to provide supplemental income for a designated beneficiary who is physically disabled, mentally disabled, has chronic illness, or has other special needs and is receiving or may be eligible to receive government benefits—such as Social Security, Supplemental Security Income (SSI), Medicare, or Medicaid.

A special needs trust is often created by parents of a disabled child, with the trust prohibiting distributions from being used for the child’s food, clothing, or shelter to ensure the child (or adult) remains eligible for related government benefits. A special needs trust must be created before the beneficiary reaches the age of 65.

In Texas, a Special Needs Trust (SNT), also known as a Supplemental Needs Trust, is a legal arrangement that allows a person with a disability to benefit from assets held in the trust without jeopardizing their eligibility for government assistance programs like Medicaid and Supplemental Security Income (SSI). These trusts are designed to provide for the extra and supplemental needs of the beneficiary, beyond what government programs cover, without disqualifying them from receiving such benefits. The trust assets can be used for a variety of life-enhancing expenditures without compromising the beneficiary's public assistance. Texas law requires that a Special Needs Trust be established before the beneficiary turns 65 years old. It is important to structure the trust correctly to ensure compliance with both state and federal regulations, and an attorney with experience in special needs planning can provide invaluable assistance in setting up a Special Needs Trust.