Memorandum of Law

Re: Estate Planning Instruments for Blended Family with Special Needs Beneficiary

Client: Henderson, Robert & Susan

I. ISSUE PRESENTED

What estate planning instruments are appropriate for a blended family with a special needs beneficiary, and how can the Hendersons structure their estate to ensure the beneficiary's eligibility for government benefits is preserved while providing supplemental support?

II. BRIEF ANSWER

The Hendersons should utilize a Special Needs Trust (SNT) — specifically a Third-Party Supplemental Needs Trust — in conjunction with a revocable living trust framework. A properly drafted SNT will allow assets to benefit the special needs beneficiary without disqualifying them from Medicaid or Supplemental Security Income (SSI). For the blended family dynamic, we recommend a Qualified Terminable Interest Property (QTIP) Trust to provide for the surviving spouse while protecting remainder interests for children of prior marriages.

III. APPLICABLE TEXAS STATUTES & AUTHORITY

• Tex. Prop. Code § 112.001 et seq. — Creation of Trusts
• Tex. Prop. Code § 142.005 — Management Trusts for Persons with Disabilities
• 42 U.S.C. § 1396p(d)(4)(A) — Self-Settled Special Needs Trust safe harbor
• OBRA '93 — Omnibus Budget Reconciliation Act provisions governing SNTs
• SSA POMS SI 01120.200 — SSI Trust rules

IV. RECOMMENDED INSTRUMENTS

1. Revocable Living Trust — Primary vehicle; avoids probate, enables seamless administration
2. Third-Party Special Needs Trust — Sub-trust for special needs beneficiary; preserves government benefits
3. QTIP Trust — Provides for surviving spouse with remainder to children of prior marriage
4. Pour-Over Will — Captures any assets not transferred to trust during lifetime
5. Durable Power of Attorney — Financial management during incapacity
6. Healthcare Directive / MPOA — Medical decision-making authority