Special needs trusts in Florida

The problem: a person with disabilities who relies on Medicaid, SSI, or other means-tested benefits will lose those benefits if they receive an outright inheritance above tiny limits ($2,000 cash for SSI). The benefits often cover more than the inheritance — Medicaid pays for institutional care that would cost $80,000–$150,000 a year out of pocket.

The solution: a Special Needs Trust (SNT) holds assets for the disabled person's benefit without making the assets count as theirs for benefits purposes. Properly drafted, the SNT supplements government benefits without disqualifying them.

Three types of SNTs

Funded with the disabled person's own assets — typically from a personal injury settlement, an outright inheritance received before planning, or an insurance payout.

• Federal authority: 42 U.S.C. § 1396p(d)(4)(A).
• Beneficiary must be under 65 at the time of trust creation.
• Beneficiary must be disabled under SSA standards.
• Payback provision required: at the beneficiary's death, remaining assets must reimburse Medicaid for benefits provided. Whatever's left after Medicaid payback goes to other beneficiaries you name.
• Common use: rescuing assets after a sudden lump-sum receipt that would otherwise disqualify benefits.

Third-party SNT

Funded with someone else's assets — typically parents, grandparents, or other relatives. This is the planning vehicle for most family situations.

• No payback to Medicaid: the trust funds were never the beneficiary's, so no reimbursement obligation.
• Remainder freely directed: at the beneficiary's death, whatever's left goes wherever the trust says (siblings, other family, charity).
• No age limit on the beneficiary.
• Common use: parents or grandparents leaving an inheritance to a disabled child or grandchild without disqualifying their benefits.

Pooled SNT

Multiple individual sub-accounts pooled and managed by a non-profit organization. Useful when the beneficiary doesn't have someone capable of serving as trustee.

• Federal authority: 42 U.S.C. § 1396p(d)(4)(C).
• Common in Florida — several Florida non-profits operate pooled SNTs.
• Lower setup cost than individual SNT (often a few hundred dollars vs. several thousand).
• Ongoing fees for trust administration (typical: $1,500–$3,000/year).
• Payback provision: assets remaining at death generally go to the non-profit's charitable mission rather than designated remainder beneficiaries (varies by program).

What an SNT can pay for

Distributions from the SNT must supplement, not supplant government benefits. The trust can pay for:

• Quality-of-life expenses that benefits don't cover: travel, entertainment, hobbies, extra clothing, electronics, books.
• Medical care not covered by Medicaid: experimental treatments, alternative therapies, dental work, vision care.
• Education: tuition, tutoring, materials, computer equipment.
• Transportation: vehicle (titled in trust's name typically), modifications for accessibility, transportation services.
• Personal care attendants (in addition to those provided by Medicaid).
• Vacations and recreation.
• Companion animals and their care.
• Adaptive equipment: wheelchairs, hearing aids, communication devices beyond Medicaid coverage.

What an SNT typically should NOT pay for directly

Direct payments for these can reduce SSI or Medicaid eligibility:

• Cash distributions to the beneficiary: handing them cash counts as income.
• Food and shelter (in some configurations): SSI rules treat trust-paid food and shelter as 'in-kind support,' which can reduce SSI by up to 1/3. Some SNTs avoid this; others accept the reduction.
• Rent paid directly to a landlord: complicated under SSI rules; sometimes triggers reduction.

The trustee's job is to navigate these distinctions. SNT trustees typically work with experienced administrators or attorneys to make distribution decisions safely.

Choosing a trustee

SNT trustees have unusually difficult work — coordinating distributions with benefits rules, working with the beneficiary's care team, maintaining records for benefits agencies.

• Family member: lowest cost but requires education on SNT rules. Workable for simple trusts; risky for larger ones.
• Professional fiduciary: experienced with SNT-specific issues. Common for trusts above $250,000 or where family is unavailable.
• Corporate trustee (bank trust department): expensive but well-staffed. Often combined with care manager for complex cases.
• Co-trustees: family member + professional. Best of both worlds; common in mid-sized SNTs.

ABLE accounts — a complement, not replacement

Florida ABLE accounts (FS 1009.986) are tax-advantaged savings accounts for disabled individuals — different from SNTs but often complementary.

• Annual contribution cap: ~$18,000/year (2026 figure), with higher caps for working beneficiaries.
• SSI excludes up to $100,000 in ABLE.
• Beneficiary controls the account directly (unlike SNTs).
• Best for: smaller amounts, quality-of-life expenses, gifts from family.
• Combine with SNT: ABLE for day-to-day, SNT for larger inheritances.

How we draft them

• Standalone third-party SNT: $2,500–$4,000 flat fee.
• SNT integrated with broader estate plan: smaller marginal cost.
• First-party SNT (rescuing assets): $3,000–$5,000; often time-sensitive.
• Pooled SNT enrollment: we coordinate with Florida non-profits; typically $500–$1,500 in legal coordination fees.
• Coordination with benefits planner / Medicaid attorney: complex cases sometimes require a Medicaid-specific attorney working alongside; we refer when needed.

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