What Do Florida Parents Need to Know About Special Needs Trusts?
As the parent of a child with special needs, ensuring that your child retains his or her access to government benefits into adulthood is a crucial estate planning consideration. In order to qualify for supplemental security income (SSI) and Medicaid, a person must have less than $2,000 in assets, and making outright gifts to your child could result in him or her becoming ineligible for these and other needs-based programs.
Enter the supplemental special needs trust.
A special needs trust is an estate planning tool that is specifically designed to allow parents to provide financial support to their children without disqualifying their children from needs-based government benefit programs like SSI and Medicaid. When structured properly, a special needs trust allows parents to gift money and other assets to their special needs child into adulthood without jeopardizing the child’s program eligibility and without creating undesirable tax consequences.
4 Important Facts about Special Needs Trusts
1. There are Two Different Kinds of Special Needs Trusts.
There are two different kinds of special needs trusts: first-party and third-party. As parents, you will most likely be setting up a third-party special needs trust. This simply means that the trust is funded by someone (you) other than the beneficiary (your child). First-party special needs trusts are used when the disabled individual needs to place his or her own assets into a trust (i.e. in the case of receiving an inheritance or proceeds from a lawsuit) in order to preserve his or her SSI and Medicaid eligibility.
2. When You Place Assets into a Trust, They are Not Yours and They are Not Your Child’s.
Assets that you place into a special needs trust become property of the trust. This means that they are no longer yours, and it also means that they do not belong directly to your child (which is what preserves his or her program eligibility). When you establish the trust, you will appoint a “trustee” who will be responsible for managing the trust’s assets for your child’s benefit.
4. A Special Needs Trust Can Work for Years to Come.
Once you establish a special needs trust for your child, you can continue to contribute assets to the trust as you see fit, and your trustee can serve the trust on an ongoing basis (you can also replace your trustee if it becomes necessary to do so). In the end, the amount of money you save by preserving your child’s access to government benefits can be substantial, and it will far exceed the relatively minimal cost involved in establishing the trust.
Discuss Your Family’s Options with Jacksonville Life Planning Attorney Mark F. Moss
Would you like more information about special needs trusts? If so, I encourage you to get in touch. To schedule an initial life planning consultation, please call 904-329-7242 or get in touch online today.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Law Offices of Mark F. Moss, PLLC, through this site does not form an attorney/client relationship.