Supplemental Needs Trust Attorney: Providing for Family Members with Special Needs
When searching for a trustworthy special needs attorney, Florida residents can rely on the team at Walser Law Firm. Our firm has over 35 years of experience planning for families with special needs individuals.
An experienced lawyer at our firm can help you understand how to provide for such disabilities of family members or loved ones in your estate planning so that your generosity benefits your loved one without impairing their ability to receive other forms of support.
Florida Estate Planning Lawyer: Provide for Family Members with Special Needs
If you have a disabled dependent like a child with special needs or a family member in a nursing home, you want to provide for that person. But you should reconsider leaving the person a lump sum. Your generous gift could render your loved one ineligible for government benefits they would otherwise be entitled to, like SSI or Medicaid.
Generally speaking, a Special Needs Trust (Supplemental Needs Trust) is a better option. A Special Needs Trust is designed so that the trustee can provide life-enhancing services the government does not ordinarily cover. These services may include special wheelchairs or other equipment, therapies, medical second opinions, travel expenses, extra personal nursing care, extra services or expenses required to maintain their standard of living, etc.
The assets in the trust are not available to the beneficiary for the asking but are discretionary. Therefore, the government excludes assets when it evaluates your loved one’s eligibility for benefits.
A special needs trust is a trust designed for beneficiaries who are disabled, either physically or mentally. It is written so the beneficiary can enjoy the use of property that is held in the trust for their benefit while at the same time allowing the beneficiary to receive essential needs-based government benefits. In addition to the public benefits preservation reasons for such a trust, there will be administrative advantages of using a trust to hold and manage property intended to benefit the beneficiary if the beneficiary lacks the legal capacity to handle their financial affairs.
Special needs trusts can provide benefits to and protect the assets of the physically disabled or with mental illness. Special Needs Trusts are frequently used to receive an inheritance or personal injury settlement proceeds on behalf of a disabled person or are funded from the proceeds of compensation for criminal injuries, litigation, or insurance settlements.
Searching for a special needs trust attorney near Palm Beach? We can help you with all types of special needs trusts.
Disability Trusts (First Party SNT)
These trusts are also referred to as (d)(4)(A) trusts, which allude to where they can be found in the Federal statute that authorizes them. Due to common usage, this is usually the type of trust most people are referring to when they use the term “special needs trust.” To establish a valid Disability Trust, it must satisfy the following legal requirements.
The trust must be irrevocable and established for the sole benefit of the trust beneficiary by the beneficiary’s parent, grandparent, legal guardian, or the Court. The beneficiary must be under 65. Any assets in the trust must belong to the beneficiary. Disability Trusts require a payback provision. At the beneficiary’s death, any remaining funds must be used to reimburse the State for medical benefits provided over the individual’s lifetime.
Third-Party Special Needs Trusts
A third-party SNT is funded with assets belonging to a person other than the beneficiary. No funds belonging to the beneficiary may be used to fund the trust. Typical funding comes from gifts, an inheritance from parents, grandparents, or family members, and proceeds from life insurance policies. Unlike a first-party SNT, this trust has no provision to pay back Medicaid upon the trust’s termination; instead, the person creating the trust decides how the trust estate is distributed when the beneficiary dies.
Third-party SNTs may be established inter-vivos, i.e., during the Settlor’s life or as part of the Settlor’s estate plan, e.g., under a Will or a Revocable Living Trust. The beneficiary of a third-party SNT does not have the legal authority to revoke or terminate the SNT or to direct the use of the SNT assets for their support and maintenance. Therefore, the SNT assets are not countable assets for government benefit purposes.
Pooled Special Needs Trusts
A pooled special needs trust is a big “master” special needs trust with many sub-accounts, one for each disabled person who enrolls in the pooled trust. Enrollees benefit from the economies of scale by “pooling” these subaccounts. Pooled trusts can accept accounts of any size. According to federal law, pooled trusts must be administered by a not-for-profit association—economies of scale. Pooled trusts can accept accounts of any size. According to federal law, pooled trusts must be administered by a not-for-profit association.
Differences Between an Individual Special Needs Trust and a Pooled Special Needs Trust
An individual special needs trust is created for the sole benefit of one disabled person. Individual special needs trust that accepts deposits of the disabled person’s funds is called “first-party” trusts.
Pooled special needs trusts must be administered by a not-for-profit trustee and are created for many disabled persons at once. With first-party individual special needs trusts, the government must repaid any monies remaining in the trust upon the death of the disabled individual. With pooled special needs trusts, the government may also be refunded, but only to the extent not retained by the pooled trust.
Congress created this rule so that the not-for-profits could keep the funds to further their not-for-profit purpose of assisting people with disabilities. The pooled special needs trust allows the monies to benefit disabled persons during their lifetimes and for any remaining funds to be available to fulfill the not-for-profit’s mission.
Leaving Money to Others Can Create Serious Problems
“Disinheritance” was commonly used before the use of Special Needs Trusts was officially recognized by Congress.
Disinheritance as a means of providing for a disabled or ill person puts assets at risk. A non-disabled sibling holding assets for the benefit of a disabled sibling could be subject to liabilities such as judgments from automobile accidents, bankruptcy, or divorce.
In such circumstances, the assets meant to benefit the disabled or chronically ill person could pay the judgment creditors or the estranged spouse of the non-disabled sibling. Using a Special Needs Trust guarantees that the funds will be held only for the benefit of the person with the disability or chronic illness and not for any other purpose
Memorandum of Intent
No one else knows your child as well as you do, and no one ever could. You’re a walking encyclopedia of their habits, needs, and wishes. When your child has special needs, though, there’s an additional chapter detailing medical, behavioral, and educational requirements.
So what happens if you suddenly aren’t there? First and foremost, you should name a guardian. Still, a memorandum of intent will be crucial in helping that individual (or Successor Trustee of an SNT) minimize disruption and disorientation for your loved one. A skilled Florida estate planning attorney will advise that this memorandum should include a description of your child’s disabilities and medical history, including all medications and dietary needs. List key contacts, educational details, and their therapy and other services scheduled — all the instructions necessary for day-to-day life.
The memorandum of intent should detail family history, capturing those little things that only close relatives understand: daily schedule, favorite activities, things they love or hate, and living arrangements that work or don’t… there’s no detail too small to ease the transition.
Because levels of disability vary, and because many people fail to recognize that, it’s important to include a list of daily activities.
Contributing to family life builds self-esteem, so if your child can help with the dishes, put it in the memorandum. If they love to clear the table, mention that. If folding clothes frustrates them, future caretakers must have this information upfront.
Does your adult child have a job? Do they want one? What type of work can they be successful at? Is college an option? How did you plan to pay for it? These are all questions that emerge eventually in the life of a person with special needs, and although you certainly plan to be there to help answer them, you must address them beforehand for your child’s sake.
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Walser Law Firm is ready to work on your behalf, from wills and trusts to probate and trust administration to Medicaid planning.
Our experienced team of attorneys is here to help you navigate your estate plan and the Florida probate process, with a wide range of expertise and specialty service provisions that cover all of you and your family’s legal needs as you age.
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