How Can Trusts Be Used to Address Special Needs Concerns in Florida Estate Planning?

What is a Florida Special Needs Trust?

If you are a parent of a special needs child or have a loved one with specials, you already understand the extra care and dedication required to take care of them adequately. You may worry about what will happen to them after you're gone, so creating an estate plan that incorporates their special needs is crucial.

Legal advocates in Florida recommend creating a special needs trust (SNT) to ensure your loved one continues to receive the assistance they need financially and legally. You want to minimize the risk that they will go without essential services once you're gone or that the inheritance you leave for them will be used for the wrong purpose, leaving them vulnerable.

A special needs trust is a specialized account created to hold and control assets for the benefit of a beneficiary with disabilities. The trust ensures the individual remains eligible for government assistance programs, including Medicaid and Supplemental Security Income. A significant inheritance jeopardizes an individual's eligibility for government benefits, but a special needs trust minimizes the risk.

What Are the Different Types of Special Needs Trusts?

Florida estate planning laws provide for many special or supplemental needs trusts. Work with skilled estate planning lawyers in Florida to help you choose one that best suits your planning needs. 

Support Trusts

Support trusts require that the trustee contributes to the beneficiary's support in areas like food, clothing, education, shelter, and medical care. However, beneficiaries of these types of trusts are ineligible to receive government-funded assistance such as Medicaid or Supplemental Security Income. If you need your beneficiary to be eligible for these services, avoid using this type of trust.

First-Party Special Needs Trust

This type is created by the individual with special needs, their guardian, parent, or close relative using the beneficiary's funds or personal assets. For example, if the trust beneficiary receives a settlement from a personal injury lawsuit, the funds can be put in the trust if they require lifelong care.

If the assets remain in the fund after the beneficiary's death, a payback to the state is made, but only to the extent the individual receives public assistance benefits. First-party trusts are structured as irrevocable and ideal for individuals with special needs who expect to receive a large inheritance.

Third-Party Special Needs Trust

Third-party special needs trusts are created by anyone other than the beneficiary to meet the beneficiary's unique needs. The structure can be that of a revocable or irrevocable trust. The difference between first-party and third-party special needs trusts is that the assets remaining after the beneficiary's death don't go to the government. You can designate where you want the funds to go.

When and Where Can I Establish a Third-Party Special Needs Trust?

There are a few ways to establish third-party special needs, and you stand to be correctly guided by experienced Florida estate planning lawyers:

  • Revocable living trust: If you create a special needs trust through a revocable living trust, it will get funded upon your death through the living trust. The trust avoids probate, effectively saving your family time and money.
  • Testamentary special needs trust in your last Will: The inheritance will be set up when you die, but the funds must go through probate to establish the trust.
  • Stand-alone special needs trust: You can establish a stand-alone third-party SNT during your lifetime and fund it by yourself or have other people add funds to it. For example, your extended family members leave an inheritance to the beneficiary or gift money to the trust during their lifetime.
  • Switch or backup special needs trust: You can create a general needs trust for a beneficiary not responsible for their funds. In the event they become disabled and need government benefits during their lifetime, the fund can switch from being a general need to a special needs trust.

When creating a special needs trust in your estate plan, consider incorporating a backup SNT even if you don't have a special needs child. Consult extensively with Florida estate planning attorneys to protect the future needs of your loved ones.

What Are the Benefits of a Special Needs Trust?

A special needs trust can enable you to plan for the future if you have a dependent with special needs. Some compelling reasons to consider establishing this trust are:

  • It protects assets while making the beneficiary eligible for government benefits
  • A special needs trust can add to the beneficiary's quality of life by providing more than the basics, such as social events, sports activities, and vacations.
  • It helps provide money needed for care beyond Medicaid and other government benefits.
  • It is flexible and enables you to prepare the trust's terms in a way that can help with unique circumstances.
  • It can protect a beneficiary with special needs from potential exploitation and helps control spending if the beneficiary is not responsible enough to receive an inheritance.
  • You get peace of mind knowing your loved one with special needs is provided for without taking them off Medicaid or SSI.

An Experienced Legal Advocate Helping You Create a Special Needs Trust

Special needs trusts are beneficial for families with special needs dependents. However, creating them is complex, and the terms are often irrevocable, which can limit the beneficiary's control over the funds in the future. Depending on the structure, tax issues may also arise. Given all these factors, working with experienced estate planning lawyers in Florida is crucial.

They can provide in-depth legal advice to ensure you create a special needs trust that serves the intended purpose. If you're looking for reputable legal advocates to help you, The Dellutri Law Group hosts knowledgeable lawyers who can look into your case. Call us at 800-391-4337 to schedule a complimentary strategy session.