Florida Estate Planning: Special Needs Trust FAQs

Special needs trusts are commonly misunderstood in an estate planning context. To clear up some of the confusion, we asked Sarah E. Peart, an attorney from Tampa Florida whose practice focuses mainly in the areas of wills, trusts, estate planning and real estate law to provide us with answers to some frequently asked questions. Here’s what she said:

Question: What are the risks to a disabled person whose inheritance is not in a special needs trust?

Answer: Any assets, money or income that are not included in an exempt special needs trust will be considered available as income in calculating an individual’s availability for public benefits and assistance.

Question: Can parents or grandparents put money or assets in a trust for disabled children or relatives?

Answer: They can, but those assets will count as income or assets available when calculating eligibility for Medicaid. The assets of a special needs trust are exempt from the calculation of the eligibility of Medicaid and other public benefits and a regular trust is not exempt. So those assets will be considered and may disqualify the individual from receiving assistance.

When people come in for estate planning, they generally really don't know what they need – even when it comes to a regular trust. It becomes a trendy term and people come in and say, ‘Oh, I need a living trust,’ and they have no idea what it is. You always need to talk to an attorney and also let them know if there are any problems with a disabled person in your family so that you can make sure that person is provided for.

Question: How does a special needs trust impact public benefits?

Answer: The special needs trust is used so that the individual can still qualify for and receive medical assistance benefits and SSI, which is Supplemental Security Income.

Question: Would the beneficiary ever have to pay back any monies that they receive from state or federal public assistance?

Answer: Yes. A special needs trust always requires a clause guaranteeing reimbursement to the state for any medical benefits paid if there are any remaining assets in the trust. If the trust is already exhausted, then the state won't collect anything. However, once the beneficiary passes, the state gets automatic first rights to whatever’s left in the trust. So you have to consider each individual disabled person’s needs to determine how much you actually want to put into the trust.

Question: What happens if the trustee dies or can’t continue to act in that capacity any further?

Answer: The successor trustee can be named in the trust document or a court will appoint a new trustee.

Question: How are special needs trust attorneys compensated?

Answer: Generally by the hour or by a flat fee agreement. The grantor is usually the one that is responsible for compensating the attorney for the initial trust creation.

If you believe a special needs trust might be right for your situation, contact an experienced Florida trusts attorney to evaluate your options. Consultations are free, without obligation and are strictly confidential.