If you’re thinking about creating a special needs trust, it’s important to know how this unique estate planning tool works – including what must be done to comply with both federal and state law, how it can be funded and how the funds can be spent.

Complying with federal and Florida State law

Sarah E. Peart, an attorney from Tampa Florida whose practice focuses mainly in the areas of wills, trusts, estate planning and real estate law, says that there are several crucial clauses that must be in a special needs trust in order for it to comply with both state and federal laws. She explained, “[T]here must be a direct statement that the beneficiary has no ability to access the income or principle of the trust or even to compel the trustee to act and that they can have no control over the assets whatsoever for it to remain exempt. The special needs trust must also explicitly mandate that the state will be reimbursed with the remaining assets upon the death of the beneficiary.”

Funding a special needs trust

How does someone determine how much money to put into a special needs trust? Peart says, “That’s completely dependent on the actual person that it will benefit, what their disability is, how long their lifespan is expected to be and the quality of life to which they’ve become accustomed. For example, many parents want their child to have the same quality of life that they were accustomed to when the parent was alive. So it really is very, very personal and individual to each beneficiary.”

However, Peart says that there are limitations. For example, she told us that the grantor has to put the money directly into the special needs trust for the benefit of the beneficiary or there’s no exemption. So, someone cannot simply give money to a disabled relative and have them put it directly into a special needs trust.

Common expenditures of a special needs trust

Special needs trusts are specifically used for supplemental needs – meaning needs that are not provided for by Medicaid or other public benefits. Peart says that, “Common expenditures are for transportation, recreation, education and companionship. Some people use it for additional home nursing care or private rooms in nursing homes or hospitals. They can be used for anything that’s above and beyond the basic needs of an individual which are already being provided. The trustee has discretion to decide what will be considered a supplemental need. Basic medical assistance will be provided by other means and should not be paid for by the special needs trust.”

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.