At Strategic Counsel Law Group, we explore many different approaches to our clients’ unique needs and draft the appropriate documents to protect assets and plan for the future, whatever it may bring. When a family member is disabled from working or has physical or intellectual disabilities, special steps must be taken to preserve the individual’s entitlement to government assistance while still allowing them to participate in estate inheritance and family gifts. One key approach is to create a special needs trust. Learn more about special needs trusts below, and call Strategic Counsel Law Group in Tampa to discuss whether such a trust should figure into your family’s estate plan.
What Is a Special Needs Trust?
Adults who are disabled and cannot earn sufficient income to support themselves might benefit from Medicaid as well as a Social Security program known as Supplemental Security Income, or SSI. Medicaid covers a variety of health care expenses, while SSI provides monthly income assistance to be used for housing, groceries, clothing and other basic necessities. SSI uses a strict definition of “disability,” and not everybody with a disability qualifies.
In addition, both Medicaid and SSI are “means-tested”; individuals must have very low levels of income to qualify for assistance. This situation sets up a puzzle. Family members with the means and desire to help out might want to give the individual cash gifts on a regular basis or leave a sizeable inheritance in their will. Unfortunately, this financial help is counted as income to the recipient and can easily disqualify them from eligibility for SSI and Medicaid. Maintaining eligibility for these programs is for many essential to giving them an independent life without having to rely on family help or other uncertain or insecure means. This is where a special needs trust comes in.
A special needs trust, also known as a supplemental needs trust or simply SNT, is a way to provide a better quality of life for people with disabilities without jeopardizing their eligibility for government programs. Special needs trust funds are not counted as income to the individual and don’t impact eligibility for SSI or Medicaid. The funds can be used for a variety of purposes that supplement public assistance.
A special needs trust can be self-settled (created by the individual with disabilities) or by a third-party, such as a parent, grandparent, uncle, sibling, etc. There is also something called a litigation special needs trust. This type of trust is used to protect a tort recovery when a person was disabled in a car accident, work accident, or by medical malpractice and obtained a significant settlement or judgment from the responsible party. Most special needs trusts, however, are created for people born with developmental disabilities due to genetics, environmental factors or a birth injury.
What Can Special Needs Trust Funds Be Used for?
Special needs trust funds can be used to supplement the care and quality of life for the recipient. SNT funds can go toward better housing, better food, better clothing, and pay for healthcare not otherwise covered by Medicaid, including certain medical and dental expenses, therapy, and rehabilitation. A special needs trust can also pay for:
- Education and job training
- A car or rideshare account
- Hobbies
- Entertainment
- Vacations, including paying for a travel companion
A special needs trust has the added benefit of protecting assets from creditors or scammers who might prey on the intellectually disabled.
SNT funds must supplement government assistance and not supplant it. One must be careful when using trust funds for food, rent, mortgage and related homeowner expenses. If not done correctly, these expenditures could decrease one’s government benefits. The special needs trust attorneys at Strategic Counsel Law Group can help you understand the benefits and limitations of a special needs trust.
What Happens to Special Needs Trust Funds After Death?
Depending on whether the SNT is a self-settled or third-party trust, the government might claim reimbursement from the trust fund for benefits it provided during the individual’s lifetime. Money remaining in the trust after reimbursement, or if no reimbursement was required, will go to any beneficiaries named in the trust to receive the remainder.
ABLE accounts are another way to provide an individual with money for qualifying expenses without jeopardizing their government entitlement. ABLE accounts are tax-free savings accounts and are not subject to Medicaid recovery in Florida. Talk to your estate planning attorney about creating an ABLE account in conjunction with your special needs trust.
Get Qualified Advice and Professional Assistance With Special Needs Trusts
Living with an intellectual or physical disability is hard enough without having to rely solely on public assistance for all the necessities of life. When extra funds are available through family, an inheritance or tort recovery, a special needs trust is an ideal way to supplement government support and enhance the individual’s quality of life. For help setting up a special needs trust for yourself or a loved one, call the estate planning attorneys of Strategic Counsel Law Group at 813-286-1700, and let’s have a conversation about your needs, goals and desires.
