As the parent, guardian, or loved one of someone with special needs, your dedication to their care and wellbeing never ends. As such, you may be worried about what happens to your loved ones when you can no longer provide and care for them. Your estate plan can ensure that your loved one is protected for the rest of their lives. But it is not as simple as naming them as a beneficiary in your estate.  


What to Consider When Planning for Your Special Needs Loved One in Your Estate Plan


While planning considerations depend upon the person’s age, competency, and other family considerations, the goal is always the same: to protect and enrich the life of your special needs loved one. 


Listing someone with special needs as a beneficiary on a 401(k) or insurance policy may seem like a simple and safe way to provide for them. But if your loved one relies on Supplemental Security Income (SSI), Medicare, or Medicaid benefits, a significant financial gift could disqualify them for continuing to receive these benefits. 


While preserving those benefits is essential, it’s also important to understand that these benefits provide only for necessities such as food, housing, and clothing. Special needs planning works to preserve public benefits while supplementing and enhancing the quality of your loved one’s life. 


Estate planning for your special needs loved one can help with a variety of long-term worries such as:

  • money management 
  • protecting eligibility for public benefits
  • ensuring a pool of funds available for future use should public benefits stop or be restricted


What is a Special Needs Trust?


A special needs trust is a planning tool that can build financial security for your loved ones while maintaining their enrollment in essential public benefits programs. A properly drafted special needs trust should expressly state your intent to help your loved ones without affecting thier needs-based eligibility. 


In Florida, assets held in a special needs trust are not considered for SSI, Medicare, or Medicaid eligibility. Additionally, a trust allows you to bridge shortfalls between benefits your loved one receives and their actual living costs, medical expenses, payments for caretakers, transportation costs, and other expenses specified in the trust. A special needs trust can also include restrictions to ensure distributions are not made for items provided by SSI, Medicare, and Medicaid; thus, preserving the funds for a more extended time. What’s more, special needs trusts are irrevocable and cannot be seized by creditors or the winner of a lawsuit.


An additional benefit of the special needs trust is that people with special needs are often unable to manage their finances. In creating the trust, you can appoint a trustee to act as the money manager to ensure proper financial management after their death.


Selecting your trustee is one of the most important decisions you will make about your special needs trust. The trustee can be anyone you trust to carry out your wishes and to keep the best interest of your special needs loved one in mind. This might be:

  • a parent, sibling, or another distant relative
  • an attorney
  • a trust company or a financial institution
  • a non-profit organization with experience in special needs
  • co-trustees, usually a family member acting with a trust company


Keep in mind that in Florida, a trustee can be held liable for improperly administering special needs trust if it adversely affects the beneficiary’s benefits eligibility. Therefore, you must speak with your intended trustee before making a designation to ensure they know not only your goals for the trust but also their responsibility. 


When Will the Special Needs Trust Become Effective?


There are a couple options for a special needs trust, but either must be established before the beneficiary turns 65. You have the option of creating a special needs trust upon your death by incorporating the trust in a will (testamentary trust). The other option is for the parents to create a special needs trust while still alive (living trust). The advantages of the living trust include:

  • avoid probate which can be costly and time consuming
  • the creation of a trust to which other family members can make contributions
  • the co-trustee can gain experience in administrating the trust while you are still available to help with decision making


If you have a loved one with special needs, take the time to make sure they are cared for long after you are gone. An experienced estate planning lawyer will explain your legal options and any potential issues you and your loved one may encounter with your special needs trust or other estate plan details. Call our experienced estate planning lawyers at Mortellaro Law today: 813-367-1500.