Estate planning becomes increasingly important any time you become a parent. If your child has special needs, the need to have a comprehensive estate plan in place is heightened yet again. Incorporating a special needs planning component into your overall estate plan is the best way to ensure that your child’s eligibility for government assistance programs is not threatened as a result of the financial support you continue to provide for your child when he/she reaches adulthood. Consulting with an experienced special needs planning attorney ensures that your plan is tailored to your individual needs and circumstances and that it works as intended. In the meantime, the Vero Beach attorneys at Kulas Crawford & Smith discuss what you should know about special needs planning in your Florida estate plan.
Special Needs Planning in Florida
As a parent you undoubtedly want to provide emotional and financial support to your child long past the point at which he/she becomes a legal adult. If your child depends on the assistance provided by government programs such as Medicaid and SSI, however, any financial support you provide could jeopardize program eligibility. This conundrum is what spurs parents of children with special needs to incorporate a special needs planning component in their Florida estate plans. Within that component, you may wish to include:
- Special Needs Trust (SNT): A Special Needs Trust (SNT) is typically the cornerstone of a special needs plan. A SNT allows a beneficiary with special needs to receive inheritances, gifts, lawsuit settlements, or other funds without jeopardizing eligibility for government benefits. A properly drafted SNT ensures that the inherited assets are not considered as personal assets of the individual with special needs, thus safeguarding their eligibility for crucial assistance programs. The trust assets can then be used to “supplement” the assistance provided by government programs. If you establish an SNT, take care when choosing a Trustee for the trust. You may wish to appoint a professional Trustee to provide an additional layer of protection.
- Letter of Intent: The trust agreement you create when you establish an SNT outlines the legal framework used to administer the trust, including rules for distribution of the trust assets. A Letter of Intent, also referred to as a “Memorandum of Intent,” provides guidance and insights into the beneficiary’s preferences, routines, and aspirations. While a Letter of Intent is not a legally binding document, it can provide invaluable information such as the trust beneficiary’s likes, dislikes, medical history, and day-to-day requirements. Think of a Letter of Intent as your opportunity to tell your child’s story and provide instructions for his/her care.
- ABLE Account: Created through legislation enacted in 2014, an ABLE account, which stands for “Achieving a Better Life Experience,” is a tax-advantaged savings account designed to help individuals with disabilities and their families save for disability-related expenses. To open an ABLE account, the individual must have been diagnosed with a significant disability before the age of 26 that meets the criteria set forth by the Social Security Administration. Contributions to an ABLE account grow tax-free, meaning you will not pay taxes on the earnings as long as the money is used for qualified disability expenses. The annual contribution limit for an ABLE account is tied to the annual gift tax exclusion, which is $19,000 as of 2025. This means that any individual or combination of individuals can contribute up to $19,000 per year without incurring gift taxes. Qualified Money withdrawn from an ABLE account is tax-free if used for qualified disability expenses, such as education, housing, transportation, healthcare, assistive technology, personal support services, and other expenses that help improve the quality of life for the individual with a disability. Best of all, ABLE accounts do not affect eligibility for means-tested federal benefits such as Supplemental Security Income (SSI) and Medicaid, as long as the account balance remains below a certain threshold.
Can We Help You with Special Needs Planning in Florida?
To learn more, please join us for an upcoming FREE seminar. If you would like assistance with special needs planning in Florida, please contact an experienced Vero Beach estate planning attorney at Kulas Crawford & Smith by calling (772) 398-0720 to schedule a consultation.
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