The basic purpose of a trust is to make things easier for loved ones. When loved ones in Florida has special needs, a special needs trust can be set up to supplement benefits received from government programs. When properly established, a special needs trust can allow the beneficiary to continue to receive government benefits while also having access to additional funds from a trust. There are three types of special needs trusts that the party supplying the funds may consider.
If estate planning involves a first-party special needs trust, assets that may include an accident settlement or inheritance are held for the beneficiary. With a third-party option, the trust holds funds from other individuals wishing to help support the beneficiary with special needs. This usually includes parents and other family members. If there are multiple beneficiaries with special needs, a pooled trust can be created to hold funds. Charities usually set up this type of trust.
Another reason for setting up a special needs trust is to meet requirements for Supplemental Security Income. Applicants or beneficiaries may only have up to $2,000 in their own name. In order to qualify for SSI, additional assets can be placed in a first-party special needs trust. After the beneficiary's death, remaining funds are used to reimburse the government for medical care expenses. With a third-party trust, there is no payback requirement when a beneficiary passes. Remaining funds can be passed along to other family members. Reimbursement is necessary with a pooled trust although a nonprofit operating as a trust also gets part of the funds.
When a special needs trust is part of estate planning efforts, the donor's taxable estate may be reduced enough to ease financial burdens on remaining loved ones. In some cases, a lawyer may be able to help elderly individuals with special needs beneficiaries set up a third-party trust to transfer assets and allow them to qualify for long-term care coverage from Medicare.