Florida Estate Planning: Funding & Administering A Special Needs Trust

A special needs trust, created for the benefit of a disabled individual under the age of 65 who qualifies as disabled under federal law or a relevant state statute, can be a valuable estate planning tool. To explain the pros and cons and how one of these trusts can be funded and administered, we asked a Florida attorney whose practice focuses in this area of the law.

Funding a Florida special needs trust

How can a special needs trust be funded? 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 explain. Here’s what she told us:

The grantor directly funds the trust and there are restrictions as to who can actually be a grantor of one of these trusts. The beneficiary can never be the grantor; their own personal assets cannot be used. However, parents, grandparents or the legal guardian can create a special needs trust and fund it with individual assets directly. Any asset can be put in these trusts. These special needs trusts are most commonly used when a disabled person is coming into a large inheritance or settlement and so those assets are directly placed into the trust.

The income and the principle are used specifically for the beneficiary’s supplemental care, meaning anything that is not covered by the public benefits. So, the amount put into a special needs trust is dependent on each beneficiary’s unique circumstances.

Administering a Florida special needs trust

A trustee administers a special needs trust, according to Peart, who explained, “Basically anyone other than the beneficiary can act as a trustee and usually being a ‘competent adult’ is the standard for acting as a trustee. Another option is to have the trustee be a corporation, a bank, an attorney, an accountant, one of those professional offices, so you don’t have to worry about the background of a family member.”

Pros and cons

As with any estate planning tool, there are always pros and cons – and special needs trusts are no exception. Peart provided us with both sides of the coin:

• Pros. The grantor gets peace of mind that they can provide specifically for the disabled person’s long term care and needs while not affecting that individual’s Medicaid or other public benefits. In many cases, parents or grandparents will set up a special needs trust to provide for their disabled loved one while also providing for their family members in a separate estate plan.
• Cons. The special needs trust requires that any remaining assets after the disabled’s death will be used first to reimburse the state for any assistance that was given. That makes it very unlikely that there will be anything left in the estate for distribution to the beneficiary’s heirs.

If you think 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.