Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

SPECIAL NEEDS TRUST PLANNING

Families with a special needs child/adult need more estate planning than families without. A Special Needs Trust (SNT) can play an important role in helping families plan. Issues to consider: Preserve public benefits while enhancing your child/adult's lifestyle. Many individuals with special needs obtain basic support from Supplemental Security Income (SSI) - a gateway to Medicaid and other critical programs. Since SSI covers only essential expenses, it is important to create a supplement for their lifestyle. But because SSI imposes limits on income and assets, gifts or an inheritance could adversely impact benefits eligibility. The Social Security Administration (SSA) does not count assets in an SNT as income for determining benefits eligibility because the assets are owned by the trust rather than the special needs beneficiary. Ensure assets will be used as intended. With an SNT, distribution of assets is directed by trust documents as well as SSA and IRS guidelines. By comparison, if you leave assets to an "able-bodied" child and ask that some of the funds be used for the sibling with special needs, the child may fail to honor your request, lose the assets to creditors or die prematurely and leave the funds to his or her own children. Allow others to contribute. If you establish the trust now, family members and friends can make gifts to the SNT. Anyone interested in leaving an inheritance or making a gift should be advised to direct bequests to the SNT. Maximize the benefits of a personal injury settlement. If the child/adult is the recipient of a sizable settlement, having the payout (often a lump sum plus a structured settlement) directed to a self-settled SNT offers several benefits. They will still qualify for public benefits, can use settlement funds for nonessential expenses and may enjoy the financial security of receiving regular payments for life.