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Special needs trusts (SNTs) are crucial tools for families in Florida with children who have disabilities. These trusts allow parents or guardians to set aside funds for the child’s future care without jeopardizing their eligibility for government benefits. 

In Florida, it is not a requirement that an SNT be established before the beneficiary turns 18. Special needs trusts can generally be created at any age. However, while there is no strict requirement to establish a special needs trust before the beneficiary turns 18, doing so can help ensure the beneficiary’s eligibility for means-tested government benefits such as Supplemental Security Income (SSI) and Medicaid. Establishing the trust before the beneficiary turns 18 can also provide financial security and proper asset management throughout the beneficiary’s lifetime.

Understanding Special Needs Trusts

A special needs trust is a legal arrangement that enables individuals with disabilities to have resources set aside for their benefit while still qualifying for public assistance programs like Supplemental Security Income (SSI) and Medicaid. There are three types of special needs trusts: first-party, third-party, and pooled trusts.

  1. First-Party Special Needs Trusts: Funded with the beneficiary’s assets, often through inheritance, personal injury settlements, or savings. The beneficiary must be under 65 when the trust is established, but it can be set up at any age before that.
  2. Third-Party Special Needs Trusts: Funded with assets from someone other than the beneficiary, typically done by parents or grandparents as part of their estate planning. These trusts can be created at any time, and the funds in the trust do not affect the beneficiary’s eligibility for government benefits.
  3. Pooled Special Needs Trusts: These can be established with the beneficiary’s assets at any age. Nonprofit organizations manage them and pool the resources of many beneficiaries for investment purposes while maintaining separate accounts for each beneficiary.

Importance of Establishing the Trust Before Age 18

Establishing a special needs trust before the beneficiary turns 18 can provide numerous benefits:

  • Protection of Assets: It ensures that any assets set aside for the child do not disqualify them from receiving essential government benefits.
  • Continuity of Care: It allows for a seamless transition into adulthood, ensuring that funds are available for ongoing care and needs.
  • Flexibility in Fund Use: Trust funds can cover a wide range of expenses not typically covered by government benefits, such as education, therapy, medical procedures, and recreational activities.
  • Peace of Mind for Parents: Knowing that there is a financial plan in place for the future care of their child provides significant peace of mind for parents.

Steps to Establish a Special Needs Trust in Florida

  • Consult with an Experienced Attorney: It is essential to work with an attorney experienced in estate planning and special needs trusts. They can guide you through the specific legal requirements in Florida.
  • Draft the Trust Document: The attorney will help draft the trust document, ensuring it complies with Florida law and federal regulations.
  • Fund the Trust: Once the trust is established, you can fund it with assets intended for the beneficiary’s care. These assets can include cash, investments, property, and other valuable resources. In addition, be aware of the costs associated with establishing and maintaining the trust, including legal fees, trustee fees, and administrative expenses.
  • Appoint a Trustee: Choose a reliable trustee to manage the trust. This person or institution will have a fiduciary duty to manage the trust assets in the best interest of the beneficiary.
  • Maintain Compliance: Ensure the trust complies with ongoing reporting and tax requirements. The trustee should keep accurate records and file necessary reports with government agencies.
  • Communication with Family Members: Ensure that family members and caregivers are aware of the trust and understand its purpose and limitations.

Benefits for the Beneficiary

  • Financial Security: Provides long-term financial security, ensuring that funds are available for the beneficiary’s needs throughout their lifetime.
  • Enhanced Quality of Life: Funds can be used for services and activities that enhance the beneficiary’s quality of life beyond what government benefits cover.
  • Future Planning: Establishing the trust before the beneficiary turns 18 allows for better financial planning and asset growth over time.

Takeaway

Establishing a special needs trust before a child with disabilities turns 18 in Florida is a strategic and compassionate step for parents and guardians. It safeguards the child’s financial future, ensures continued eligibility for essential government benefits, and provides peace of mind for the family. Consulting with an experienced attorney and carefully planning the trust’s structure and funding are critical to maximizing the trust’s benefits. Verras Law, P.A. has offices in Palm Bay, Tampa, and St. Petersburg and can guide you with the creation and maintenance of a special needs trust for your loved one. Contact our firm today.