Special Needs Trust in Florida

What are the benefits of a special needs trust?

A Florida special needs trust is created with the intent of preserving the eligibility for a disabled individual to receive need-based public assistance such as Medicaid and SSI. Because these government programs are need-based, possessing large sums of money will disqualify applicants. Lawsuit payments, large inheritances, and other unauthorized sources of income may render an individual unable to get the assistance they desire. The special needs trust is designed to allow disabled individuals to continue to receive the benefits of their assistance programs while also being the beneficiary of any assets placed into the trust. The creation of a special needs trust in Florida allows for a family to continue to provide for their loved ones even after life has ended, while still allowing that individual to maintain other benefits.

Who should be the trustee?

According to the Florida law, the trustee can be any competent person of at least 18 years of age. Although almost anyone can be the trustee, you should not pick just anyone. The special needs trust is an excellent way to receive financial sums while maintaining government benefits if administered and funded properly. There are many components regarding special needs trusts, Medicaid, SSI, SSD, and SSDI. You should choose a trustee who is well-versed and equipped to understand and handle such complicated financial matters.

It may be a good idea to choose an independent person or institution as the trustee. Unless a family member is familiar with the specific laws and finances pertaining to a special needs trust in Florida, you may want to appoint an independent professional such as a banking institution, professional trustee, trust company, or accountant.

What is a pooled Special Need Trusts in Florida?

A special needs trust can designate a non-profit organization as the trustee which will put the trust created in a pooled trust. A pooled trust is one that is managed by a non-profit organization by combining the benefits of many trusts for distribution to all participating beneficiaries. A typical requirement for a pooled trust is that any remaining funds shall be dedicated to remain in the pool. Pooled trusts also accept individuals seeking a special needs trust who are over the age of 65 who would otherwise not be permitted to create such a trust.

What is a third party special needs trust?

A third party special needs trust in Florida is created and funded by an individual who bears no obligation to the beneficiary. The donor may contribute any amount of funds into the trust while they are alive, as well as leave an inheritance upon passing. A payout for the grantor’s life insurance policy may allocate to the trust along with other personal assets and property. A significant restriction on this type of special needs trust in Florida is that no funds belonging to the beneficiary may enter this trust. A benefit of this type of trust is that because none of the funds never belonged to the beneficiary, there is no requirement to pay any remaining balance to Medicaid or the government as long as the appropriate language has been included when drafting the trust. A third party special needs trust is a complicated document that is vulnerable to critical errors. Drafting the trust should be done by a professional because it is the special needs person who suffers if anything goes wrong.

How will my special one receive money from his/her Florida special needs trust?

Existing within the trust should be a financial instrument able to control funds dedicated to the trust. The simplest option for fund storage and management is to establish a bank account in the name of the trust. The beneficiary of the special needs trust will not be the owner of the account, but it is possible their name may be in the title. For example, the name on the account may be “the Trust for So and So,” or could simply be “Trust 1234.” Once an account is created, funds are available for deposits and withdrawal. The trustee is the individual or institution to make payments and handle the finances.

Again, the trustee must be careful to only use the funds in authorized ways and for approved reasons. The primary purpose of creating a special needs trust is to continue receiving government assistance. The trustee should not perform any actions that endanger the beneficiary’s ability to receive benefits. Many times this happens by accident because the trustee is not well educated in the subject. Please seek professional advice on this subject because it’s the special needs person who suffers when this goes wrong!

The trustee may not withdraw cash or buy gift cards to give to the beneficiary for personal use. Funds from a special needs trust may not be used to pay for food or housing expenses either. There are also limits to the amount of money flowing in and out of the account at a given time. The reasons mentioned are all valid arguments in favor of hiring an experienced professional to be the trustee for a special needs trust and to consult with an experienced Orlando estate planning lawyer. The risk of losing relied-upon benefits should not be taken lightly.

Can I create a special needs trust myself?

If you are the beneficiary of the trust you wish to create, the beneficiary’s parent(s) or grandparent(s), or if you are the guardian of the beneficiary, then you may create a Florida special needs trust. It is highly recommended that you seek the expertise and guidance of an estate planning attorney who can skillfully draft a trust that suits your situation. A qualified estate planning attorney can inform you of all the requirements necessary for a special needs trust, as well as the precautionary steps to maintain any government benefits.

The risk associated with drafting your own documents outweigh the reward of saving a few bucks. Usually, it ends up backfiring and expensive legal fees, drawn from out of the estate, follow. In the special needs arena, your special one and his/her benefits are at risk. Trying to draft your own documents can save you a few thousand dollars, but if your special one loses their government benefits that will lose much more than that. Not only will you have to hire an attorney to TRY and get their benefits back, but they won’t receive any benefits during that time. You are risking, hundreds of thousands of dollars, sometimes even over 1 million dollars that your special one will receive over the course of their lifetime. This just is not a gamble you want to take for someone else’s well being who is depending on your judgment, planning, and resources.

If you would like to discuss special needs trusts in Florida during a FREE consultation, please call The Finity Law Firm at (407) 636-4066, email us at info@finitylaw.com, or fill out our contact form HERE. We would be honored to help you and your family protect your special one!