Special Needs Trusts in Florida: Protecting Benefits While Providing Care

When a family member has a disability, estate planning takes on special importance. A well-meaning inheritance can actually harm your loved one by disqualifying them from essential government benefits. Special needs trusts provide a solution.

The Problem with Direct Inheritance

Many government benefit programs for people with disabilities are means-tested, meaning recipients cannot have more than minimal assets (typically $2,000 for SSI and Medicaid). A direct inheritance—even a modest one—can:

• Disqualify your loved one from SSI
• Terminate Medicaid coverage
• Force a spenddown of the inheritance
• Leave them worse off than before

  A special needs trust avoids these problems by holding assets for the beneficiary's benefit without counting as their resources for benefit eligibility.

  Types of Special Needs Trusts

  First-Party (Self-Settled) Special Needs Trust:

• Funded with the beneficiary's own assets
• Often used for inheritance, lawsuit settlement, or divorce proceeds
• Must include Medicaid payback provision
• Must be established before age 65

  Third-Party Special Needs Trust:

• Funded with assets from family members or others
• No Medicaid payback required
• Can be established in a will or during lifetime
• No age restrictions
• Often created by parents planning for a child's future

  Pooled Special Needs Trust:

• Managed by a nonprofit organization
• Individual accounts within a larger pool
• Good for smaller amounts or when no trustee is available
• May have Medicaid payback depending on the circumstances

  What Special Needs Trusts Can Pay For

  The trust should supplement, not replace, government benefits. Appropriate expenditures include:

  Supplemental Needs:

• Medical care not covered by Medicaid
• Therapies and special equipment
• Personal care attendants
• Transportation
• Recreation and entertainment
• Education and training
• Technology and adaptive equipment

  Lifestyle Enhancement:

• Travel and vacations
• Sports and hobbies
• Social activities
• Holiday celebrations

  Shelter and Utilities: (with careful planning)

• Housing costs may affect SSI but may still be worthwhile
• Professional advice is essential for housing decisions

  Choosing a Trustee

  The trustee manages trust assets and makes distribution decisions. Consider:

  Family Member Trustee:

• Knows the beneficiary's needs
• May serve without compensation
• Must understand benefit rules
• May face emotional challenges

  Professional or Corporate Trustee:

• Experience with special needs trusts
• Knowledge of benefit programs
• Objectivity and continuity
• Fees may be substantial

  Trust Advisory Committee:

• Family members provide input
• Professional trustee makes decisions
• Combines family knowledge with expertise

  Creating a Special Needs Trust

  Special needs trusts require careful drafting to ensure:

  • Government benefits are protected
  • The trust is properly classified
  • Appropriate powers are granted
  • Distribution standards are correct
  • Payback provisions are included (if required)
  • Remainder provisions reflect your wishes

    This is not a document for templates or DIY approaches. Work with an attorney experienced in special needs planning.

    Letter of Intent

    A letter of intent supplements the legal trust document with important personal information:

    • Daily routines and preferences
    • Medical history and medications
    • Favorite activities and interests
    • Important relationships
    • Behavior management approaches
    • Future goals and aspirations

      While not legally binding, this letter helps future caregivers and trustees understand how best to care for your loved one.

      Contact our office to discuss special needs planning for your family.