Special Needs Individuals
If you have a disabled dependent like a child with special needs or a spouse in a nursing home, you of course want to provide for that person. But if you are thinking of leaving the person a lump sum, you should reconsider. Your "gift" could render your loved one ineligible for government benefits he'd otherwise be entitled to, like SSI or Medicaid.
Generally speaking, a Special Needs Trust (also known as a Supplemental Needs Trust) is a better option. The Special Needs Trust is designed so that the trustee can provide life-enhancing services the government does not ordinarily cover. These services may include special wheelchairs and other equipment, therapies, medical second opinions, travel expenses for medical appointments, etc. The assets in the trust are not available to the beneficiary for the asking, but are totally discretionary. Therefore, they are excluded by the government when it evaluates your loved one's eligibility for benefits.
You can fund a Special Needs Trust now, while you're alive, or you can earmark funds through your will or trust that will flow into the Special Needs Trust when you’re gone.
A Special Needs Trust can also protect a spouse who is receiving, or likely to receive, Medicaid benefits for nursing home care from being disqualified for benefits. Florida law states that your spouse must receive 30% of your "augmented estate" whether or not the assets are probated. If you predecease your spouse, his inheritance may result in his being dropped from the Medicaid program until the inheritance is completely exhausted. But, by leaving the 30% in a Special Needs Trust, you can ensure that benefits are not interrupted. You may also include provisions in the trust so that when your spouse dies, any remaining trust assets pass to the beneficiaries.
The Special Needs Trust is a complex instrument and should be drafted only by a certified and experienced elder law/estate planning attorney. The Karp Law Firm can help.