Special needs trusts (SNTs) are specific legal arrangements that have some unique elements. If you are a person who needs an SNT, has a child with an SNT, or are the trustee of this type of trust, there are some important details to understand. Read on for what you need to know about special needs trust funding in Florida.
What Is a Special Needs Trust?
A special needs trust is a legal arrangement that allows a physically or mentally disabled person or chronically ill person to maintain their ability to receive public assistance benefits even if they have access to income or assets that would disqualify their eligibility for benefits.
How a Special Needs Trust Works
This type of trust is overseen by a trustee who distributes assets to the trust beneficiary. The goal of the trust is to protect the assets and income of the disabled individual or chronically ill person, but also supplement their needs beyond their government benefits. Some of the needs that this type of trust may be used for are caretakers, medical expenses, dental expenses, living expenses, transportation costs, cooking assistance, etc.
Types of Special Needs Trusts
There are two primary types of trusts: first-party SNT and third-party SNT. A third-party special needs trust is the most common and operates similarly to a traditional trust. It is funded by someone other than the beneficiary, often a family member, who contributes their own assets to the trust. This type of trust can be either a revocable trust or irrevocable trust
First-party trusts are less common and trust assets are funded by the beneficiary. Additionally, this type of trust requires a Medicaid repayment provision so, after the beneficiary passes away, the remaining assets repay any outstanding Medicaid balances. One additional type of SNT is a pooled or community trust. The funds in these trusts typically come from a nonprofit organization and are used to support the needs of several families.
Benefits of a Special Needs Trust
An SNT can uniquely serve the interests of a disabled or chronically ill individual by:
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Providing access to government benefits for the disabled person’s long-term needs and quality of life
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Protecting any income or assets that may come to them over the course of their life
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Being able to choose a trustworthy party to serve as a trust manager and court oversight to guard against financial abuse
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The ability to help pay for a broad range of needs
When Do the Benefits of a Special Needs Trust End?
After serving the important needs of its beneficiary, an SNT typically ends as the result of one of these three circumstances: 1) There are no longer trust funds, 2) The individual no longer qualifies as disabled, or 3) the person passes away.
When someone is facing difficult life challenges due to a mental or physical disability or chronic illness, it is easy to see why establishing an SNT to protect their assets and disability benefits is necessary. If you would like to discuss establishing a special needs trust in Florida, contact our expert law firm today!