Caring for a Child with a Special Needs Trust in Florida

Parents of children with special needs must plan carefully if they want to leave money or property to those children; otherwise, they could jeopardize their children’s Medicaid and Supplemental Security Income (“SSI”) benefits. Estate planning is especially important in such situations, and a special needs trust is one possible solution.

Background and Definitions Related to Children with Disabilities

According to Forbes, roughly 2.8 million school-aged children were reported to have a disability in 2010. Further, the number of students with disabilities has increased more quickly than both school enrollment and the general population over the past 20 years.

The Individuals with Disabilities Education Act (“IDEA”) defines a child with a disability as a child who needs special education and related services as a result of having been evaluated (in accordance with sections 300.304 through 300.311 of IDEA) as having:

• an intellectual disability;
• a hearing impairment;
• a speech or language impairment;
• a visual impairment;
• a serious emotional disturbance;
• an orthopedic impairment;
• autism;
• traumatic brain injury;
• an other health impairment;
• a specific learning disability;
• deaf-blindness; or
• multiple disabilities.

The Problem

CNBC explains that the government offers assistance to people with special needs through programs such as Medicaid and SSI. These programs only support a person at the poverty line, however, which is why parents often choose to supplement that assistance both while they are alive and after they have died.

Because of the requirements of these government assistance programs, it is important that parents properly set aside funds for children with special needs, as improperly setting aside funds could result in the loss of Medicaid and SSI benefits.

For example, to qualify for SSI, an individual must have less than $2,000 in assets (though an individual’s home, car and normal personal effects are generally exempt from that calculation).

Therefore, holding assets in that individual’s name, naming that individual as the beneficiary of wills, insurance policies or retirement accounts, or leaving money directly to that individual could result in that individual being disqualified from receiving government assistance.

Special Needs Trust a Potential Solution

To qualify for government assistance programs, it is best that a person with special needs has no assets in his or her own name.

How, then, should parents of special needs children provide for their children in the long term?

A special needs trust—with the child as the beneficiary, of course—could be the answer.

As CNBC explains, assets in a special needs trust can be used toward items and services for the beneficiary. Because the assets are left to the trust (rather than to the beneficiary), and because a trustee (rather than the beneficiary) manages the trust, the assets in the trust do not disqualify the beneficiary from receiving government assistance.

A properly crafted special needs trust can help ensure that children with special needs receive the assets to which they are entitled without being disqualified from receiving government assistance. If you are considering a special needs trust for your estate planning needs, contact an attorney at the Law Offices of Larry E. Bray, P.A. with locations in Boca Raton and West Palm Beach.