Third-Party Special Needs Trusts
The introduction to the comment is below:
On March 9, 2007, a crowd gathered to rejoice in the birth of a long-awaited baby girl. Josh and Leigh’s seemingly perfect pregnancy was about to come to an end with the birth of their first daughter, Jadyn. As Leigh gave one last push and waited to meet her new daughter, the doctor discovered that something was wrong. The baby was not breathing and had slight physical deformities. Jadyn was immediately transported via life-flight to a hospital over an hour away that could provide the necessary care for her. The next day, Josh and Leigh awoke to a life that they could have never anticipated. Jadyn was diagnosed with a genetic disorder called CHARGE syndrome that will cause her to live a life plagued with health problems–delayed growth, respiratory issues, hearing concerns, and a weak immune system causing her to be susceptible to constant infections.
Five months of care in the Neonatal Intensive Care Unit and millions of dollars in medical expenses later, the two-income middle-class family was forced to apply for governmental assistance. In order to give Jadyn the twenty-four hour care she needed, Leigh quit her job, and Josh had to deplete his life savings so that they could qualify for the Medicaid which was desperately needed. Immediately after Jadyn’s birth, there was an outpour from the community to help in someway. Donations to the family seemed to be the obvious answer, but under the current federal Social Security Disability system these added assets would cause Jadyn to lose the governmental assistance that allowed her to see the best cardiologist, neurologist, and ear, nose, and throat doctors in the state.
Is there anything that could be done to help this family? Under the current Texas Trust Code, a third-party special needs trust could be created to resolve this dilemma. The trust would allow a grandparent or other third party to create a trust for Jadyn to ensure that she would be afforded the same quality of life she would have if she did not have special needs and still be able to retain the much needed governmental assistance. Another benefit to this trust is that after Jadyn’s death, instead of the remaining amount in the trust repaying the government, the balance could be dispersed as Jadyn would like. Under the Uniform Trust Code, however, this option may not be possible. The purpose of this Comment is to argue that Texas should not adopt the Uniform Trust Code because doing so could negatively impact the ability for disabled individuals and their families to receive assistance through third-party special needs trusts.