Living Trust Florida

Special needs trusts

Beneficiaries receiving Social Security income, Medicaid income or other government income could have a reduction or lose benefits if they receive an inheritance.

A person must not exceed certain income, cash and asset values to qualify for benefits (certain assets are not included in the valuation, such as basic shelter and clothing costs).

By creating a special needs trust, the inheritance for the disabled beneficiary is held in the living trust rather than being distributed outright. The assets in the trust are not counted as part of the beneficiary's assets.

The successor trustee of the special needs trust can make distributions of cash to the beneficiary but the distributions could result in dollar-for-dollar reductions in SSI income. Physical gifts that could be sold and turned to cash are also considered income, which can reduce benefits.

Items that cannot be sold for money, such as movie tickets, can be purchased by the successor trustee for the beneficiary and are typically not counted as income.

Because of the complexity with knowing which types of purchases and distributions could affect the beneficiaries SSI, it is very important to consider who is being appointed successor trustee.

Corporate trustees are often more experienced than family members dealing with disability income. However, a family member may be able to best understand the true needs of the beneficiary. Co-successor trustees are an option to combine the time. Consult with an experienced estate planning attorney to create a special needs trust.

The above special needs trust is called a third-party special needs trust. Another type of special needs trust is a self-settled special needs trust, which is created by the person receiving disability who may have received a large settlement and in come into another large sum of money. Unlike third-party special needs trusts, assets in self-settled special needs trusts after the disabled beneficiary passes must be used to repay government services or other programs for disabled individuals.

If you have a beneficiary who is and may in the future be receiving disability income, consult an estate planning attorney for legal advice.

Living trusts and other uses

• Controlling distributions for young beneficiaries
  
• Maintain a Residence
  
• Blended families
  
• Families with pets - food and vet expenses
  
• Avoid probate
  
• Double estate tax exemption for married couples