Financial Planning – Special Needs Trusts and ABLE Act Accounts

Special Needs Trust – If you have a child with a disability, spouse, parent, or other loved one with a disability, you may be aware of the fact that leaving them an inheritance can trigger the loss of their means-tested government benefits, such as Medicaid, SSI, vocational rehabilitation, or subsidized housing. The solution may be to create what is commonly referred to as a Special Needs Trust, also known as a Supplemental Trust.

Unless you have a loved one with a disability, you may not realize that even with government assistance, many needs go unmet. For example, neither Medicaid nor SSI provide enough to cover dental care, the cost of a handicap accessible vehicle, or custodial care in the event your loved one needs constant or near constant assistance in their activities of daily living. This is why having a source of supplemental funds is critical. A Special Needs Trust/Supplemental Needs Trust provides this alternative because assets in the name of the Trust are not counted as belonging to the beneficiary. They are a form of Irrevocable Trusts. Three other very important features that make a special needs trust different:

• The funds held in Trust are not subject to seizure by creditors
• Money transfers into the Trust are exempt from the Medicaid 5-year “look back” period
• Depending on whether it was funded with assets previously belonging to the beneficiary, or with assets previously belonging to someone else, the Trust may or may not require remaining assets be paid back to Medicaid upon the death of the beneficiary.

ABLE Act Accounts – Allow individuals with disabilities to save money and build assets without negatively impacting their federal benefits such as SSI and Medicaid.

These accounts provide a tax-free savings and investment account that can be used for a wide variety of qualified disability expenses.

A person is eligible if they are a Florida resident with a qualifying disability with onset prior to the age of 26.