Florida Special Needs Trusts
What is a Special Needs Trust?
A Special Needs Trust is a trust set up to protect the financial well-being of a disabled child in order to assure that the child will not become ineligible for government benefits through inheritance, life insurance, or a personal injury settlement. It is a vehicle through which parents can appoint a trustee to hold property after they are gone for the benefit of their disabled child. The purpose is to provide for things that enhance an individual’s life, without jeopardizing their access to government benefits such as Medicaid and Social Security Supplemental Income Benefits (SSI). The Trust sets aside funds for the care and benefit of the disabled person, and a Trustee has sole discretion as to the use of those funds. The funds in the Trust are not considered an asset when the person applies for government benefits since he or she has no right to demand access to them. It is very important that the Trustee not give cash to the disabled person, nor pay for those items that are provided for by the governmental agency. Examples of things that the Trustee can pay for are haircuts, a TV, vacations, airfare, clothing, entertainment, magazine subscriptions, or renovations to make a home or apartment more accessible.
Third Party vs First Party Trusts
A Third Party Special Needs Trust is funded by a person other than the disabled individual, usually by the parents or grandparents. It is drafted as a provision of their own Trust agreement or Will. Other persons can add to this Trust. The advantage of this type of SNT is that any money left over after the death of the disabled person can revert back to the remaining beneficiaries of the original Trust agreement or Will.
A First Party Special Needs Trust, also known as a “self-settled trust”, is funded by the disabled person, usually through an inheritance or a personal injury settlement. A parent, grandparent, legal guardian or court can establish this trust. Any money left over after the child dies is subject to a lien by the state.