Special Needs Trusts
When you have a loved one with physical or intellectual disabilities, it is essential to establish an estate plan that considers their long-term care needs and abilities. While needs-based government benefit programs assist in covering the cost of certain types of medical care, they may not cover all the specific needs and services that can significantly improve the quality of life for an individual with disabilities. Furthermore, most government benefits are means-tested, and only available to those that financially qualify. A Special Needs Trust allows a disabled individual to have the benefit of private funds and government benefits.
Special Needs Trusts are powerful and complex legal planning tools that empower individuals with disabilities and their loved ones to maintain a quality of life while protecting assets and preserving public assistance eligibility. Government assistance programs, such as Medicaid and related programs, have income and asset limits that vary by program and by state. Some rules are different based on the source of funds as well.
A SNT is designed to enhance the disabled individual’s quality of life by covering additional expenses and services not provided in full by Medicaid. SNTs can provide funds for supplemental coverage, such as non-covered medical treatments, therapies, travel to medical appointments, personal hygiene essentials, clothing, and special wheelchairs or other equipment. ASNT may either be funded by a First-Party or Third-Party, and it is imperative to understand the distinctions between the types of SNTs to make informed decisions regarding your loved one’s quality of life.
A First-Party Special Needs Trust is funded with the assets of the individual with a disability. First-Party SNTs are usually set up when a disabled person receives substantial assets, such as a lawsuit settlement or an unplanned inheritance, or any unearned sum of money that could otherwise jeopardize Medicaid eligibility. This Trust is designed for individuals under sixty-five (65) years old. Upon the disabled individual’s passing, any remaining funds in the Trust will first be used to reimburse the state of Florida for Medicaid expenditures paid on behalf of the Medicaid recipient. Only after Florida Medicaid has been reimbursed can the remaining funds be distributed to the other beneficiaries or heirs of the disabled person who established the First-Party SNT.
Alternatively, a Third-Party Special Needs Trust is set up and funded by a family member or loved one of a disabled individual. The Trust creator, or the grantor, contributes their assets to fund the Trust, and the disabled individual will be named the beneficiary. For example, a parent may leave money for their disabled child via a Third-Party SNT rather than leaving the inheritance outright, which could lead to the loss of government benefits. This type of SNT may be amended, funded, and revoked at any time. Unlike a First-Party SNT, there is no a Medicaid payback requirement, meaning that upon the death of the beneficiary, all remaining assets are distributed pursuant to the terms of the Trust.
Establishing a Special Needs Trust requires careful planning and drafting, so it is imperative to seek an attorney who specializes in special needs planning. The experienced and compassionate attorneys at SAMUELS WOOD PLLC can guide you through the necessary steps to enhance your loved one’s quality of life while maintaining their eligibility for government assistance. Call our firm at (561) 864-3371 or fill out the consultation request form located on our website – www.samuelswood.com.
