Frequently Asked Questions
A special needs trust is a legal entity created for the benefit of individuals with special needs. Because it is distinct and separate from the individual, the SNT can hold property without disqualifying the individual for government benefit programs (SSI, SSDI, Medicaid, Medicare, etc.)
SNTs should be used when an individual with special needs either 1) owns assets that will disqualify them from receiving government benefits or 2) requires assets beyond those supplied by the government to provide a desirable quality of life.
Special needs trusts should be created by an attorney familiar with the special needs community as well as government benefit program eligibility.
Special needs trusts can receive both physical and investable assets. Stocks, bonds, cash equivalents, real estate, life insurance policies, and collectibles can all be received by a special needs trust.
First-party, or “self-settled” trusts, are designed to hold assets the individual with special needs already owns. These include legal settlements in the individual’s name, inheritances prior to the trust formation, or funds in a UTMA/UGMA account.
Third-party, or “supplemental” trusts, are designed to hold assets the individual will not take legal possession of. These include proceeds from an insurance policy, inheritances after trust formation, and gifts.
Special needs trusts are controlled by a trustee. Trustees are responsible for ensuring the funds in the trust are used only for specified goods and services that support the individual with special needs.
A Trustee can be any competent adult person: a parent, sibling, friend, etc. Trustees can also be organizations (commonly called a “Corporate Trustee”) such as a bank, law firm, or trust company.
Yes, an individual with special needs can have both an SNT and an ABLE account. In fact, SNTs and ABLE accounts work very well in tandem.
Achieving a Better Life Experience (ABLE) accounts are savings & investment accounts for individuals with special needs. These accounts can hold up to $100,000 worth of investable assets that grow tax-free and do not count against government benefit eligibility.
ABLE accounts should be used by individuals with special needs who require the ability to invest smaller sums of money (less than $100,000) tax-free without jeopardizing government benefit eligibility.
ABLE accounts can be created through a financial advisor or through their state sanctioned 529 ABLE provider. For the state of Florida the provider is ABLE UNITED.
ABLE accounts must be used for “Qualified Disability Expenses”. QDEs are broadly defined but include: health expenses, education, housing, transportation, legal fees, financial management, employment training & support, assistive technology, personal support services, funeral & burial expenses, and more.
ABLE accounts are controlled by the individual with special needs if they are capable. If the individual lacks the capacity to manage the account themselves, their guardian would control the account.
Guardianship is when a person loses or gives up some of their civil rights to another person to carry out on their behalf.
Guardianship should be considered for individuals with significant enough special needs that their decision-making skills and ability to self-care are in question.
Guardianship is a legal process that should be handled by a competent attorney.