Palm Beach Estate Planning Attorneys Understand the Importance of Special Needs Trusts

Special needs planning requires compassion and attention to detail

Providing financial support for special needs family members is commendable. Unfortunately, the complexities of special needs planning can be overwhelming. Special needs trusts, supplemental trusts, and Medicaid benefits from the government are all components which must carefully work together to ensure the best possible financial support. With more than 32 years of experience, the insightful attorneys at Kitroser Lewis & Mighdoll effectively address special needs planning matters for hundreds of families throughout South Florida. Let us assist you in forming the right estate plan and trust structures for your needs.

A special needs/supplemental trust

You may have heard the terms “special needs trust” and “supplemental trust” used interchangeably. In some ways these terms are interchangeable, but the base concepts are important to understand. Many families establish trusts for special needs individuals. However, most special needs people are already on Medicaid, receiving government benefits. In order to not lose the Medicaid benefit, a special needs trust must functionally supplement the Medicaid benefits – not duplicate benefits already given. In that sense, the trust must sometimes be deemed supplemental, though it is clearly assisting a special needs person. This level of legal detail often leads to confusion regarding whether a special needs family member must be disinherited, or excluded from, estate planning in order to maintain government benefits. With proper estate planning, and the drafting of an appropriate trust with a trustee and defined provisions, this drastic step is often unnecessary. Consulting with our highly-experienced attorneys is critical before making any special needs planning decisions.

First party versus third party special needs trusts

There are different kinds of special needs trusts. First party, or self-settled, special needs trusts are funded by the special needs person. The beneficiary of the trust establishes the trust and funds the trust. These trusts are often established through a court process, but can also be established through direct family members. This type of trust tends to occur when the special needs person receives a large sum of money from a court settlement, an inheritance, or some other source of income. The purpose of establishing the a first party special needs trust, and really any special needs or supplemental trust, is to earmark specific funds to help a special needs person while not impacting their government benefits. Therefore, a first party special needs trust must specify that the assets of the trust will transfer to the government once the beneficiary of the trust passes away.

Third person special needs trusts are established by the family members of a special needs individual. Parents, and other family members such as grandparents, aunts, and uncles, can contribute to this type of trust. Money from the trust cannot be used for basic needs, which Medicaid covers. Similar to a first party special needs trust, the state that provided the special needs individual with benefits is paid first after the beneficiary passes away, but other remainder beneficiaries can be named. Because of these intricacies, many family members of special needs individuals are unaware that they can financially assist their loved one – either during life, or as part of their estate plan.

Contact our innovative Palm Beach special needs planning attorneys today for a free consultation

The attorneys at Kitroser Lewis & Mighdoll help you establish a thoughtful and effective special needs trust to ensure the financial well-being of those you love. We serve Palm Beach, North Palm Beach, Palm Beach Gardens, West Palm Beach, Jupiter, Juno Beach, Singer Island, Tequesta, Hobe Sound, Lake Park, and other areas of South Florida. Contact us today to schedule a free consultation at 561-721-0600 or contact us online.