There are different estate planning tools to ensure that loved ones with special needs will be taken care of when their parents or grandparents are no longer there to provide for them. Keep reading to discover the types of special needs trusts in Florida.
What is a Special Needs Trust? – The Fundamentals
In a trust, the trust maker (also referred to as “trustor” or “settlor”) transfers the title of property to a trustee (fiduciary) for the benefit of one or multiple beneficiaries. In Florida, there are two types of trusts – revocable trusts and irrevocable trusts.
A revocable trust permits the trustor to change, amend, or revoke the trust while he or she is still alive. In this type of trust, the trustor can designate him or herself as the trustee. This way, it is possible to retain control over the assets while they are no longer part of the trustor’s estate.
As its name suggests, an irrevocable trust cannot be modified, amended, or revoked. Once the trust is executed, it is not possible to change it without court intervention.
A special needs trust is a legal tool designed specifically to benefit beneficiaries with special needs. With a special needs trust, the beneficiary can receive income from the trust without hindering the ability to receive public benefits.
The nominal ownership of the assets is held by the trustee, which is responsible for managing the trust in the best interest of the beneficiary.
As the assets held in trust are not considered part of the beneficiary’s estate, he or she can retain eligibility for public benefits after receiving a large inheritance. Creating a special needs trust can be particularly complex and requires expert legal counseling.
What Types of Special Needs Trust Are There in Florida? – Taking a Closer Look
Third-Party Special Needs Trusts
A third-party special needs trust can be established as a revocable or irrevocable trust. This type of trust must be established by someone other than the beneficiary.
In most cases, parents or grandparents concerned about the future of a disabled child or grandchild create third-party special needs trusts to leave money for them without hindering their ability to receive Medicaid or other similar benefits.
The funds held in the trust can be used for anything the beneficiary needs to supplement benefits, such as:
- Additional health care
- Additional dental care
- Emergency care
First-Party Special Needs Trusts
A first-party special needs trust is an irrevocable trust established by the beneficiary, the beneficiary’s parents, grandparents, or even a guardian. This type of trust is funded with the beneficiary’s personal assets.
It is not possible to establish a first-party special needs trust as a revocable trust. This type of trust is used by individuals with special needs who expect to receive a significant amount of inheritance or gifted assets.
Please note that this type of trust has a particular drawback – if the beneficiary dies with any remaining funds in the trust, the amount must be paid back to the government in proportion to the public benefits received by the decedent.
Florida Special Needs Trust – Contact Attorney Romy B. Jurado Today
Waste no time with uncertainty – get in touch with Attorney Romy B. Jurado by calling (305) 921-0976 or emailing [email protected] to find a strategic solution for your case.
