Special Needs Trusts in Florida

Many people with disabilities rely on Supplemental Security Income (SSI) and Medicaid, which have strict limits on what a person may own. For SSI, an individual's countable resources are capped at $2,000. An inheritance, a lawsuit settlement or a savings account in your loved one's name can put those benefits at risk. A special needs trust holds money for the person's benefit without it counting as theirs, when the trust is set up and run correctly.

Third-party special needs trusts

A third-party trust holds money that never belonged to the person with the disability, such as an inheritance from parents or grandparents. It is usually created in the parents' own estate plan. When properly drafted, it is generally not counted as the beneficiary's resource, and whatever remains at the beneficiary's death can pass to other family members. For most parents, this is the trust that matters most, and it should be named in your will, your trust and your beneficiary designations.

First-party special needs trusts

A first-party trust holds money that already belongs to the person with the disability, such as a personal injury settlement, back benefits or an inheritance that was left to them directly. Federal law allows these trusts for people under 65 if strict requirements are met. The most important one: at the beneficiary's death, the trust must repay Medicaid for benefits it provided before anything passes to family.

Pooled trusts and ABLE accounts

A pooled trust, run by a nonprofit, is another way to protect a person's own funds, and can be used in some situations where a first-party trust cannot. An ABLE account is a tax-advantaged savings account for people whose disability began before a set age (raised from 26 to 46 starting in 2026). Florida's program is ABLE United. ABLE accounts are simple and useful for everyday expenses, but they have annual contribution limits and are not a substitute for a trust when larger amounts are involved.

Why the name on the document is not enough

Calling something a special needs trust does not protect benefits. What protects them is the trust's terms, where the money came from and how distributions are made. A trustee who pays the wrong expenses directly to the beneficiary can reduce or interrupt benefits. Choose a trustee who will learn the rules or work with someone who knows them.

Common mistakes to avoid

• Leaving money, life insurance or a retirement account directly to a person who receives SSI or Medicaid

• Asking a sibling to hold the money informally, which leaves it exposed to that sibling's creditors, divorce or death

• Forgetting to update beneficiary forms after the trust is created

• Waiting until after a death or settlement, when the only options left are first-party trusts with Medicaid payback

A special needs trust works alongside decisions about who can act for your loved one as an adult. See guardian advocacy in Florida and turning 18 with special needs.

Simani Law, PA helps families in Palm Beach, Broward and Miami-Dade counties plan for a loved one with a disability, in person in Boca Raton or by video. Call (561) 226-3933 or book a consultation online.