How much does it cost to set up a special needs trust in Texas?
One of the most common questions that we often get from clients or attorneys that are thinking about establishing a special needs trust is: ” What are the costs involved in setting up a special needs trust?”
Initially, the legal fee to get a trust up and running can be anywhere from $2,000 to $3,000. These estimates include getting the trust drafted and implemented. In some cases, a court approval process is required as part of the settlement.
Depending on who the trustee is or which entity is serving this trustee, there may be fees charged by a trustee as well. So, whether it’s a corporate trustee, a trust company, or a private, professional trustee, a fee schedule of some sort should outline the trustee’s fees. Some trustees charge based on the amount of assets that are in the trust, and some charge on an hourly basis.
In some situations, a family member may act as the trustee of a special needs trust. If a family member is acting as trustee, the trustee will most often be reimbursed for any expenses incurred, but family member trustees do not generally charge a fee to serve in that role.
The other ongoing fee associated with a special needs trust is the asset management fee. Typically, in a third-party trustee situation, there is a trustee that acts in the best interest of the beneficiary and has a fiduciary obligation to make prudent decisions with the funds in the trust.
Most often, the trustee will hire a third party asset management or investment management company (like Amicus) to manage the assets inside the trust. Investment management companies typically charge an investment management fee — which is usually about 1% per year of the amount of assets that they’re managing.
Ideally, an investment management company should be earning you much more than 1% by investing the assets in the trust. So, hiring an investment manager to prudently invest the funds in the trust is money well spent.
In sum, the expenses associated with a special needs trust are typically as follows:
- Legal fees: $2,000 to $3,000 initially
- Trustee fees: depends on the trustee selected
- Asset management fee: typically around 1% per year
If you need help with setting up a special needs trust for you or your client, give us a call. Amicus Settlement Planners can help you decide whether a special needs trust is in the best interest of you or your client. We can talk to you about the fees, and help you pick a trustee — depending on the factors that are unique to that case. We’d love to talk with you and help you figure it out.
What is a special needs trust in Texas?
Revision 09-4; Effective December 1, 2009
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review. See Appendix XVI, Documentation and Verification Guide.
The Omnibus Budget Reconciliation Act of 1993 identifies several types of trusts which are exceptions to the trust provisions stated in F-6300, Trusts (Aug. 11, 1993, and After). These exceptions apply only to trusts established on or after Aug. 11, 1993.
Revision 20-3; Effective September 1, 2020
A legal review of the instrument, device or arrangement that establishes the trust is necessary. Contact with regional legal staff is based on regionally established procedures. Check with your supervisor for regionally established procedures. Send a copy of the documents to the regional attorney for review.
Special needs trust:
A special needs trust is a revocable or irrevocable trust established with the assets (income or resources) of a person under age 65 who meets the SSI program’s disability criteria. The trust must be established for the person’s benefit by a parent, grandparent, legal guardian, a court or the person. Beginning Dec. 13, 2016, people under age 65 who meet the SSI program’s disability criteria may establish a special needs trust for their own benefit. The trust must include a provision that the state is designated as the residuary beneficiary to receive, at the person’s death, funds remaining in the trust equal to the total amount of Medicaid paid on their behalf.
Use Form H1210, Subrogation (Trusts/Annuities/Court Settlements), to report to the Provider Claims Payment Section any potential paybacks to the state as the residuary beneficiary of special needs trusts.
This trust exception continues even after a person becomes age 65 if the individual continues to meet the disability criteria for the SSI program. However, additions or augmentations to the trust after the person becomes age 65 are a transfer of assets.
If a person is receiving disability benefits from SSI, RSDI or Railroad Retirement (RR), their disability is automatically established. Verify that the SSI, RSDI or RR benefit is a disability benefit. Otherwise, disability must be established.
Documentation and Verification Guide, Appendix XVI
Revision 09-4; Effective December 1, 2009
The trust is not counted as a resource.
Revision 18-1; Effective March 1, 2018
Any distribution paid directly from a trust to the individual or to a third party for the benefit of the individual is unearned income to the individual in the month of receipt, except:
A payment to or for the benefit of the individual is counted under trust provisions only if such payment is ordinarily counted as income.
Revision 09-4; Effective December 1, 2009
Transfer-of-assets provisions do not apply when such a trust is esta
What is the most an attorney can charge for disability?
In most cases, a Social Security disability attorney’s fee is limited to 25% of the retroactive, or “past-due” benefits you are awarded. This fee is “capped” at a maximum of $7,200.00, so the fee is whichever is less: either 25% or $7,200.00. There is no minimum fee.
You usually don’t have to pay anything upfront to a disability lawyer. Instead, any fee is paid out of the back benefits you receive. Usually, Social Security handles the payment of fees directly, withholding the money from your backpay award, and sending the remainder to you.
Yes. While Social Security always has to approve any fee between a lawyer and a disability client, there are a few situations when the fee may be different.
To schedule a free claim review or to learn more about how we can help you, contact our office today at 856-795-8880.
Schedule A Free Claim Review
Many Social Security lawyers will either request a costs retainer to handle out-of-pocket costs, or will advance costs as they come up and request you reimburse those costs at the end of the case regardless of whether you win or lose.
Unlike some areas of law where attorneys can earn enormous fees based on large settlements, as we discussed, in most cases, Social Security attorneys are limited to no more than $7,200.00 in fees in any case, and the vast majority of cases, those fees are much lower. Because of this, most attorneys simply can’t afford to take on the costs of developing a case without reimbursement.
If you are concerned about costs, make sure you talk to an attorney about their practices and get it in writing. If at all possible, request a cap on what an attorney will incur in costs without talking to you so you can have some security that you won’t get hit with a large cost bill at the end of your case. Our firm has a clause like this built into every one of our fee agreements that acts as a promise that we will not spend more than a pre-agreed amount on costs unless we get your express approval.
Contact us or call us today at 856-795-8880 for a no obligation claim review.