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Understanding special needs trusts in Florida

On Behalf of | Mar 3, 2021 | Trusts |

Trusts serve many purposes in a Florida estate plan. A properly drafted trust can protect a person’s assets from the claims of creditors and ensure that the assets in the trust are spent exclusively for the benefit of the beneficiary. A very useful type of trust has been developed over the last 20 years to ensure the beneficiary’s eligibility for numerous federal and state financial assistance plans that have a cap on the beneficiary’s income and assets while still permitting the use of assets to benefit the person for whom the trust was established.

These trusts are called “special needs trusts” (SNT) because they are used to benefit persons with serious disabilities who cannot care for themselves. Such persons are commonly referred to as “special needs persons” or, as appropriate, “special needs children.”

How an SNT works

Federal programs such as Medicaid and Supplemental Security Income were enacted to provide financial and medical assistance for persons who have suffered a severe disability; many states have also created such plans. All these plans share a limiting feature: the beneficiary’s income and net assets must fall below a specified level or the beneficiary will not be eligible for the government assistance program.

In an SNT, the assets used to form the trust may be used only to pay medical and housing expenses for the disabled person. If the trust instrument is properly drafted, the beneficiary will retain eligibility for Medicaid and SSI. The assets in the trust, meanwhile, will be available to pay the specified expenses of the disabled person during their lifetime.

Any family that has a member who is considered to be eligible for these special needs benefits may wish to consult an experienced estate planning attorney for a detailed explanation of SNTs. An SNT must be carefully drafted to ensure that it complies with federal and state statutes.