Special Needs Trust: What Is It and What Are the Benefits?
If you have a child or another family member with special needs, it is vital to have an estate plan to address your specific circumstances. An individual with special needs may require lifelong care and financial support, which is why you should consider drafting a special needs trust to protect your child’s financial well-being after your passing.
Estate Planning and Special Needs Children
While most children with special needs receive public benefits in Florida, a financial gift or inheritance after the death of a family member could negatively affect their eligibility for government assistance. One of the benefits of a special needs trust is that it can protect the financial well-being of your child without depriving them of public benefits.
Setting up a special needs trust may not be easy, which is why it is advised to consult with an attorney to ensure that your estate plan does not jeopardize your child’s eligibility for government benefits.
What is a Special Needs Trust?
A special needs trust (“SNT”) is a type of trust that is created to benefit an individual with special needs while allowing that individual to still receive public benefits while using funds from the trust to pay for certain expenses that government assistance does not cover. In other words, a special needs trust can be used to supplement a disabled person’s financial needs beyond the necessities of life that are not covered by government assistance benefits. With careful drafting, you can customize your SNT to meet the circumstances of the special needs beneficiary.
Types of Special Needs Trusts in Florida
Florida recognizes three types of special needs trusts:
- A first-party SNT is a trust that someone establishes for themselves. This first-party SNT (also called a self-settled SNT) allows the special needs person to fund assets that belong to themselves into the SNT. Most often, this type of special needs trust is used when an individual is severely injured and receives a large settlement from the injury-causing accident.
- A third-party SNT is a trust that someone establishes for another. A third-party SNT is usually created by a parent or grandparent either during life or after their death. This is a very important type of SNT, particularly if the individual with special needs is going to inherit assets from that parent or grandparent.
- A pooled SNT is when a first- or third-party trust is managed by a non-profit organization. A pooled is when the assets held within a SNT are “pooled” within the non-profit organization and other SNT assets. One of the benefits of a pooled SNT is that the trust offers more financial stability because it consists of contributions from hundreds or thousands of people. So for those individuals who do not believe they have enough assets to “fund” a SNT, they can “pool” their assets with others and create a greater return.
Estate planning becomes crucial when you have a child or loved one with special needs. That’s why it is advised to contact an experienced estate planning attorney to help you develop an estate plan that helps (not hurts) your child or family member with special needs. Schedule a consultation with our St. Petersburg estate planning attorneys at Legacy Protection Lawyers, LLP, by calling at 727-471-5868.