ZEM H.B. 850 75(R)BILL ANALYSIS


CIVIL PRACTICES
H.B. 850
By: Goodman
4-3-97
Committee Report (Unamended)



BACKGROUND 

Under current state law, if a minor or incapacitated person is supported
by a trust funded by personal injury damage awards they may be deemed
ineligible for Medicaid benefits.  In 1993 the federal government enacted
provisions of 42 U.S.C. 1396p(d)(4)(A), which authorizes the court to
create what is referred to as a "special needs trust."  Such a trust
allows a beneficiary to continue to receive Medicaid and SSI benefits
provided the trustee is restricted to using the trust fund to provide
benefits that are not covered under Medicaid (such as specialized nursing
care). Texas statutes do not expressly authorize the creation of special
needs trusts and there is no Texas case law directly on point.  Generally,
Texas case law has strictly construed the mandatory provisions of the
Texas Property Code in Section 142.005(b) pertaining to the judicial
establishment of a trust for a minor or an incapacitated person.  However,
there is a viable position that a special needs trust can be judicially
created in Texas on the basis that (1) the court has equitable
jurisdiction to act in the best interest of the minor or incapacitated
person and/or (2) federal Medicaid law preempts state law.  Consequently,
ambiguity presently exists as to the authority for a Texas court to
establish a special needs trust. 

PURPOSE

Since there is no express statute in Texas dealing with the issue, the
addition of this section will eliminate confusion between federal and
state law and assure Texas beneficiaries the same rights that are
available to them under federal law. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1 Amends Section 142.005, Property Code, by adding Subsection (g)
as follows: 

 (g) Grants the court the express authority to establish a special needs
trust for a minor   or incapacitated person as specified under 42 U.S.C.
Section 1396p(d)(4)(A). 

SECTION 2 Emergency clause.  Effective date:  upon passage.