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The Benefits of a Special Needs Trust

Eric H. Light, P.A. Feb. 7, 2024

Man holding a card with words SPECIAL NEEDS TRUSTDeveloping a special needs trust often feels like an intricate puzzle. It's a journey filled with numerous challenges, not least of which is ensuring their financial stability. This is why it's critical to seek legal guidance from a knowledgeable estate planning attorney. 

My firm, Eric H. Light, P.A., situated in Boca Raton, Florida, serves clients throughout the state, offering personalized and proactive estate planning services. With a focus on special needs trusts, my mission is to secure your loved one's future, providing you with peace of mind. 

Advantages of a Special Needs Trust

A Special Needs Trust, or Supplemental Needs Trust, is a powerful tool designed to protect the financial stability of a loved one with a disability. These trusts allow you to set aside funds for them without jeopardizing their eligibility for government benefits such as SSI and Medicaid. 

It's crucial to realize that these trusts are governed by specific rules. The funds cannot be used for basic support and maintenance expenses, but rather for enhancing the individual's quality of life. This includes expenses such as personal care attendants, vacations, home furnishings, medical and dental expenses, education, recreation, vehicles, and physical rehabilitation. 

There are many advantages of these types of trusts, including:

  • Allows for additional financial support without jeopardizing eligibility for government benefits. 

  • Provides funding for expenses not covered by public assistance programs. 

  • Assets held in the trust do not count toward eligibility for public assistance. 

  • Can be funded through various methods, such as leaving money directly to the trust or establishing an ABLE account. 

  • Trust funds can be used for a wide range of goods and services to enhance the individual's quality of life. 

  • Choosing the right trustee ensures proper management of the trust funds. 

  • Alternative options, such as leaving money to a trusted family member or establishing an ABLE account, can also be considered. 

Setting Up a Special Needs Trust

Creating a Special Needs Trust involves establishing clear rules to ensure the funds are used appropriately. The trust document should outline how the funds can be used, emphasizing that they are intended to supplement, not replace, the government benefits received by the individual.  

The trust document should also specify who will serve as the trustee, the person responsible for managing the trust funds and making decisions on behalf of the beneficiary. It's essential to choose someone trustworthy, financially responsible, and familiar with the unique needs of individuals with disabilities. In some cases, a professional trustee, or a pooled trust administered by a nonprofit organization could be a suitable choice. 

Funding a Special Needs Trust

Funding a Special Needs Trust is a critical step in ensuring that there are sufficient funds to meet the needs of the individual with special needs. There are several methods to fund the trust, depending on your specific circumstances and goals. 

One common way to fund a Special Needs Trust is to leave money directly to the trust in your will or through a life insurance policy. This allows you to provide a substantial amount of funds for your loved one's benefit while safeguarding their government benefits. Another option is to establish an ABLE account, a tax-advantaged savings account designed for individuals with disabilities. 

Understanding ABLE Accounts

ABLE accounts offer another avenue to support your loved one with special needs. These are tax-advantaged savings accounts specifically designed for individuals with disabilities. ABLE accounts allow contributions to be made on behalf of the individual with special needs, and the funds can be used for a wide range of qualified disability expenses. 

It's important to remember that each funding strategy has its own set of rules and regulations that must be adhered to. Consulting with an attorney can ensure you choose the best funding method for your situation and that all legal requirements are met. 

Termination of the Trust

The trust document should also include provisions for the termination of the trust, such as when the beneficiary no longer requires financial assistance or in the event of their death. It's important to consult with an attorney to ensure that the trust document complies with state laws and addresses all necessary provisions. 

Legal Guidance You Can Count On

Planning for the financial future of a loved one with special needs can be a complex process. But with the right guidance, it doesn't have to be overwhelming. At Eric H. Light, P.A., I am dedicated to helping you through the legal process, providing personalized and proactive estate planning services to clients across the state of Florida.