What is a self-settled trust?
A self-settled trust is a type of trust established in Texas for the benefit of a beneficiary who is also the grantor, creator, or settlor of the trust (the person who puts assets into the trust). This type of trust is generally used to provide financial support for persons with disabilities. The trust is usually set up to have the disabled person’s own assets placed into the trust by the disabled person or their legal guardian. This type of trust helps the disabled person to qualify for government benefits, such as Medicaid and Supplemental Security Income (SSI). The trust can also provide a way for the disabled person’s assets to be managed, and to help maintain their quality of life. Self-settled trusts have certain requirements that must be met in order for them to be valid under Texas law. The trust is required to have a valid purpose, such as providing financial security and care for the disabled person, and must have an independent trustee who is not related to the beneficiary. Additionally, the trust must have a spendthrift clause, which prohibits creditors from accessing the assets in the trust. Finally, the trust must have specific language in the trust document that meets the requirements of the Texas Uniform Prudent Management of Institutional Funds Act. The self-settled trust is an important tool for providing financial security and care for persons with disabilities in Texas. It can help disabled persons maintain their quality of life and access the benefits they need. For this reason, it is important to make sure that the trust meets the legal requirements of the state and is properly managed to ensure that it serves its intended purpose.
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