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COVID-19 Update: We are working and here to help. The probate courts are open and we are continuing to file cases. Please email Attorney Nicole Morris at [email protected] if you have questions. Stay safe, we will get through this stronger together.

Setting up a special needs trust

On Behalf of | Apr 21, 2022 | trusts

A supplemental needs trust, also called a special needs trust, is a tool for estate planning that allows a disabled individual to receive monetary support without forfeiting any government benefits they are currently receiving such as SSI or Medicaid. If you’re a Florida resident, here are some important things you should know about setting up a special needs trust for your child or loved one.

Why you should establish the trust

Financial assistance from the government that is need-based may be taken away or reduced if the receiver has a change in income. This means that disabled adults may be disqualified from receiving SSI if their parents or other relatives give them monetary gifts to pay bills or take care of other financial obligations. If the parents of a disabled individual leave them funds from a life insurance policy or retirement account, the individual may no longer receive Medicaid or SSI. However, if you place the money into a special needs trust, your child can retain their benefits and still take advantage of financial support.

Third-party special needs trusts

This type of special needs trust is established by funds from someone who is not the beneficiary of the trust. The trust can be revocable or irrevocable. In most cases, the parents, guardians or grandparents of the beneficiary fund the trust.

Keep in mind that these trusts are not only for people who have disabilities. This financial tool can also be put in place for individuals who have a hard time meeting their financial obligations, such as family members who struggle with addiction. Secondary beneficiaries can also be named in the trust to take advantage of the funds once the original beneficiary passes away. You can also create a stand-alone trust so that the beneficiary will not be able to take advantage of the funds until you pass away. These options may be important to consider when you are creating an estate plan.

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