April 26, 2022

What is a Special Needs Trust in Florida?

Posted by Bishop L. Toups | In Estate Planning

A special needs trust, also known as a supplemental needs trust, are commonly used tools to protect assets for disabled children or beneficiaries.

A well drafted special needs trust by a special needs trust attorney can help disabled children or beneficiaries retain public benefits since the assets that are held in the special needs trust are not counted against the disabled individual who is receiving government benefits.

Special needs trusts are normally used for disabled children who are receiving needs based government benefits, such as Medicaid and Supplemental Security Insurance (SSI).

The assets held within a special needs trust can be used to pay for certain supplemental needs the disabled child or beneficiary might need that the government benefits do not pay for.

For example, if the disabled individual needs a new television for their house, the special needs trust trustee can purchase a new television directly from the store for the disabled individual using the special needs trust assets.

Example:

Joe and Tammy have a disabled child who is the sole beneficiary of their estate. The disabled child is receiving both Medicaid (health care coverage) and SSI each month from the government. If Joe and Tammy meet with a competent special needs trust attorney and establish a special needs trust for their child, all of the assets that pass to their child can be used to supplement the needs of the disabled child and not disqualify the child from Medicaid or SSI.

If you have a disabled child or beneficiary receiving governments and you need guidance on whether a special needs trust is right for your family, the skilled special needs trust attorneys at Daily, Montfort & Toups can help guide your family on how to properly establish a special needs trust. We are a Veteran owned law firm and have offices in Sarasota, Venice, St. Petersburg, Osprey, and Clearwater, Fliroda. You can schedule your free consultation today.


Special Needs Trusts: 6 Frequently Asked questions

Below are some frequently asked questions about special needs trusts in Florida:

Are there different types of special needs trusts?

Yes, there are two main types of special needs trusts. The first type, called a self settled special needs trust (or a first party special needs trust) is when assets from the disabled individual are used to fund the special needs trust. The second type is called third party special needs trust, which just means that assets from someone other than the disabled beneficiary were used to fund the special needs trust.

Example:

Joe is 24, permanently disabled, and currently receives Florida Medicaid and SSI. His parents left their assets to Joe in a special needs trust so that Joe’s benefits would not be affected and the assets could be used to take care of Joe. This is a third party special needs trust because Joe’s parents used their assets to fund the special needs trust. If Joe used his own assets to fund the special needs trust, then it would be considered a first party, self settled special needs trust.

Tip:

It’s very important to use a third party special needs trust over a first party special needs trust since a third party special needs trust does not require any monies remaining after the disabled beneficiary’s death to reimburse the state or federal government. Make sure to consult with a skilled special needs trust attorney before setting up a special needs trust.

Who can establish a special needs trust?

Anyone can establish a special needs trust here in Florida. It can be a family member, friend, or legal guardian. The person who creates the trust (the settlor or grantor) chooses which assets they would like to preserve for a disabled beneficiary when they establish a special needs trust.

When is a special needs trust necessary?

We believe there isn’t a specific dollar amount necessary to make a special needs trust worth it. If you have a disabled child or disabled beneficiary, or if you have a child or beneficiary who is likely be on some sort of government benefits when they get older, then its smart to set up a special needs trust for that beneficiary. Even a small amount of money left to a disabled child can cause significant issues with their means tested government benefit’s qualification.

Do I need to put money into the special needs trust right away?

No. Most of the special needs trusts we establish for clients are built into the client’s existing revocable living trust. The special needs trust is not funded until after the death of the client. This plan still gives the client full control over their assets during their lifetime and allows the client to freely change their estate plan as needed.

Is there a dollar limit for special needs trusts?

No, there is absolutely no dollar limit for funding a special needs trust. The special needs trust can hold thousands, millions, etc.

Will my assets go to the state when the special needs trust beneficiary dies?

If you set up a third party special needs trust for the disabled beneficiary, then the state or federal government will be unable to recover any monies from the special needs trust after the disabled child or disabled beneficiary passes away. A third party special needs trust is where assets from someone other than the disabled child or disabled beneficiary is used to fund the special needs trust.

Example:

Diana creates a special needs trust for her disabled daughter, Samantha. Diana uses her own funds to fund the special needs trust—this is called a third party special needs trust.

Upon Samantha’s death, all of the monies remaining in the third party special needs trust will pass to various charities that Diana supported during her lifetime.

Zero monies from the special needs trust will go towards reimbursing the state or federal government.

If you have a disabled child or beneficiary receiving governments and you need guidance on whether a special needs trust is right for your family, the skilled special needs trust attorneys at Daily, Montfort & Toups can help guide your family on how to properly establish a special needs trust.

We are a Veteran owned law firm and have offices in Sarasota, Venice, St. Petersburg, Osprey, and Clearwater, Fliroda. You can schedule your free consultation today.

Bishop L. Toups

Bishop L. Toups is an estate planning, elder law, and tax attorney in Southwest Florida.

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