What is a Special Needs Trust?
Special Needs Trusts are trusts that allow individuals receiving public benefits, such as Medicaid or Supplemental Security Income, to maintain their eligibility for benefits and to receive funds from the Special Needs Trust to provide supplemental items, above and beyond what Medicaid and/or Supplemental Security Income provide for.
There are three (3) main types of Special Needs Trusts – Self-Settled Needs Trusts, Third-Party Special Needs Trusts, and Pooled Trusts.
A Self-Settled Special Needs Trust is a trust created with the assets of a disabled individual under age 65 (often from the proceeds of a personal injury case, an inheritance or life insurance from a family member). These trusts must be established by the beneficiary, a parent grandparent, legal guardian, or the court for the benefit of the disabled individual. These types of trusts do require repayment to the State of Florida for amounts the State paid towards the disabled individual’s care. This is called the “Medicaid Lien.” After this payback is made, any remaining funds in the trust can be paid out as designated in the trust document.
A Third-Party Special Needs Trust is a trust created for the benefit of a disabled individual with the assets of a third party (typically a parent or other family member). These trusts can be created by anyone other than the disabled individual themselves. These trusts do not require that the State of Florida Medicaid Lien be paid back. Any funds remaining in the trust on the death of the disabled beneficiary may be designated to the remainder beneficiaries listed by the Grantor/Trustmaker in the Trust document.
A Pooled Trust is a trust that is managed by a non-profit organization for a group of disabled individuals. The organization pools the funds of the disabled individuals. Each disabled individual joins the trust through a Joinder Agreement and an account is established for each individual. These types of trust can be a cost-effective tool to preserve eligibility for Supplemental Security Income (SSI) and Medicaid.