If you have a child, grandchild or other loved one with a disability, you probably want to leave them something to make life better after you are gone. But a well-meant inheritance left the wrong way can do real harm. Many people with disabilities rely on means-tested programs such as Supplemental Security Income (SSI) and Medicaid, which pay for health care, therapies and long-term support. These programs have strict limits on how much a person can own. For SSI, the resource limit is just $2,000 for an individual.

An inheritance, life insurance payout or lawsuit settlement paid directly to your loved one can push them over that limit and cut off benefits until the money is spent down. A special needs trust (also called a supplemental needs trust) solves this problem. At Florida Planning & Probate, we help families throughout Broward and Palm Beach counties put these trusts in place.

HOW A SPECIAL NEEDS TRUST WORKS

Instead of leaving assets to your loved one directly, you leave them to a trust for their benefit. A trustee you choose manages the money and pays for things that improve your loved one’s quality of life. Because your loved one does not own or control the trust assets, they generally are not counted against the benefit limits.

The trust is meant to supplement government benefits, not replace them. It can typically pay for things such as:

• Medical, dental and vision care not covered by Medicaid
• Therapies, tutoring, education and job training
• Equipment, a vehicle, a phone or computer
• Travel, recreation, hobbies and entertainment
• Care management and advocacy services

Some payments, especially those for housing, can reduce SSI benefits, so the trustee should understand the rules before making distributions.

THE THREE TYPES OF SPECIAL NEEDS TRUSTS

1. THIRD-PARTY SPECIAL NEEDS TRUST

This is the trust most parents and grandparents use. It holds money that belongs to someone other than the person with a disability, such as your estate, life insurance or gifts from relatives. It can be a stand-alone trust or built into your will or revocable living trust. The biggest advantage: when your loved one passes away, whatever is left can go to other family members. There is no requirement to pay Medicaid back.

2. FIRST-PARTY (SELF-SETTLED) SPECIAL NEEDS TRUST

This trust holds the disabled person’s own money, for example an inheritance that was left to them directly, a personal injury settlement or back-payment of benefits. Under federal law, it must be established for a person under age 65, and it can be set up by the individual, a parent, grandparent, legal guardian or a court. The trade-off is that when the beneficiary dies, the trust must first repay the State of Florida for Medicaid benefits provided during their lifetime.

3. POOLED TRUST

A pooled trust is run by a nonprofit organization that keeps a separate account for each beneficiary but invests the funds together. It can be a good option when there is no family member able to serve as trustee or when the amount is too small to justify a separate trust. Pooled trusts also have Medicaid repayment rules, and transfers by people 65 and older can raise additional eligibility issues, so professional guidance is important.

Consultation Call Today: 954-557-7368

WHAT ABOUT AN ABLE ACCOUNT?

An ABLE account, offered in Florida through ABLE United, is a tax-advantaged savings account for people with disabilities. Starting January 1, 2026, eligibility expanded to people whose disability began before age 46 (previously age 26). The first $100,000 in an ABLE account is generally disregarded for SSI purposes, and the account holder can often direct their own spending. Annual contributions are capped, and remaining funds may be subject to Medicaid repayment, so an ABLE account usually works best alongside a special needs trust rather than in place of one.

COMMON MISTAKES TO AVOID

• Naming your loved one directly as a beneficiary on life insurance, retirement accounts or bank accounts. Name the special needs trust instead. (See our article on choosing a beneficiary for your trust.)
• Leaving everything to a sibling with the understanding that they will “take care of” your loved one. That money is legally the sibling’s and is exposed to their creditors, divorce and death.
• Disinheriting the child entirely to protect benefits. A properly drafted trust lets you provide for them without that risk.
• Choosing the wrong trustee. The trustee must understand benefit rules and keep careful records. Our article on a trustee’s obligations explains the responsibilities involved.
• Forgetting about decision-making authority. When a child with a disability turns 18, parents no longer automatically have legal authority. Depending on the situation, a durable power of attorney, health care surrogate designation or a court-appointed guardian advocate may be needed.

PLAN NOW FOR PEACE OF MIND

A special needs trust lets you provide for your loved one’s comfort and quality of life without putting the essential benefits they depend on at risk. Our Florida estate planning attorney will work with you to choose the right type of trust, select a trustee and coordinate the trust with your will, beneficiary designations and any Medicaid planning you may need.

Call Florida Planning & Probate today at 954-557-7368 or contact us online to schedule your initial free consultation.

This article provides general information about Florida and federal law and is not legal advice. Benefit rules change frequently. Reading it does not create an attorney-client relationship. Please speak with an attorney about your specific situation.