Ask Jaleh: What Is A Special Needs Trust?
Video Summary
What is a Special Needs Trust? Special Needs Trusts began in the mid-1970s as a method of providing disabled beneficiaries in such a way that the Trust provided for the beneficiary’s special needs beyond the scope of public benefit programs offered by federal, state and local governments. The most important element of a Special Needs Trust so that such a Trust does not adversely affect the beneficiary’s receipt of Social Security SSI, Medicaid benefits or other governmental benefits is that the beneficiary has no ability to revoke or amend the Trust or to effectively direct the use of the Trust’s assets for the beneficiary’s own support and maintenance.
There are two types of Special Needs Trust. The first type is a Self-Settled or also known as a First Party Special Needs Trust. The second type is called a Third Party Special Needs Trust.
What is a Third Party Special Needs Trust? A Third Party Special Needs Trust is one that is established and funded by someone other than the beneficiary. For example, a parent or a grandparent might establish a revocable and provide within that revocable Trust that a Special Needs Trust be established for a child or grandchild upon the parent’s or grandparent’s death. Such a Trust is a Third Party Special Needs Trust.
Prior to the development of the Special Needs Trust, it was not uncommon for a family to disinherit their disabled or special needs beneficiary because any inheritance would diminish or more likely disqualify the special needs beneficiary from the receipt of the beneficiary’s public benefits programs.
The goal of supplemental needs trust is to provide the disabled beneficiary with funds to meet the beneficiary’s supplemental or special needs without disqualifying the beneficiary from his receipt of the public benefits the beneficiary would otherwise be entitled to but for the existence of the inheritance.
The second type of Special Needs Trust is called a Self-Settled or First Party Special Needs Trust. The Self-Settled Special Needs Trust or supplemental needs trust is also referred to as a D4A Trust after the federal statutory section that permits the use of this type of Special Needs Trust or also known as a First Party Special Needs Trust. The Self-Settled Special Needs Trust is established for the appropriate court that has jurisdiction over the individual or subject matter that gave rise to the need for the Special Needs Trust.
A Self-Settled Special Needs Trust is different from a Third Party Special Needs Trust in that the Self-Settled supplemental needs trust is established by the beneficiary of the Special Needs Trust and funded with the beneficiary’s own assets. Typically the assets to fund the Self-Settled Special Needs Trust arise from an unusual event, often a personal injury lawsuit but also could be for lottery winnings or even a significant inheritance that was received by the beneficiary without the benefit of a Third Party Special Needs Trust or supplemental needs trust.
The Self-Settled Special Needs Trust is designed to allow someone who receives a personal injury recovery or any other significant lump sum of money or other countable assets and who is or will become dependent on public benefits programs such as SSI or Medicaid to preserve those funds in a Special Needs Trust or supplemental needs trust. The Special Needs Trust will provide for special or supplemental needs beyond those provided by the state or federal public benefits programs for which the beneficiary is eligible.
It is not relevant whether the need for public benefits arose either because of an existing disability or a disability that resulted from circumstances surrounding the accident that gave rise to the personal injury recovery. Through the use of special settled Special Needs Trust, the beneficiary can achieve essentially the same benefits of a Third Party Special Needs Trust beneficiary established by a third party.
If you have any questions regarding whether or not a Special Needs Trust is viable for you or for a loved one, please give us a call at Waller & Mitchell. Our phone number is (727) 847-2288.
- Published in Videos
Do I Need A Lawyer To Establish An LLC In Florida?
Video Summary
Do I need a lawyer to establish an LLC in Florida? The answer to that is no.
You can go on the Secretary State’s website and it’s very easy to establish an LLC. However, the problem with that is once that you establish it, who is the owner of this LLC, what you need to go along with your LLC is what they call an operating agreement, which sets forth who the members are and their particular percentage interest. It’s analogous to having a corporation and you don’t have any shareholders, so who owns the corporation? So it’s easy enough to set one up. However, who owns it once you have it established, who are the members, and so that’s where you do need a lawyer to set up an operating agreement designating who are the members, which is the membership interest in the LLC.
So if you would like me to set up an LLC or prepare an operating agreement for you, give me a call at (727) 847-2288. Thank you.
- Published in LLC's and Corporations, Videos
How Can I Protect My Children’s Inheritance Of My Home If I Have Creditors?
Video Summary
How can I protect my home for my children and their inheritance if I have creditors? Well, under our Florida constitution, your home is protected from creditors. It’s called homestead and that’s a different part of our Florida constitution than when you file for homestead exemption, but you have to be a Florida resident and your residence must be less than a half an acre if inside the city limits and less than 160 acres outside a municipality.
And if you’re a resident of Florida and you pass away, then the property will pass to your children unless direct it to be sold under your will, or you can leave it to your children and your creditors will not have a claim against it even if they have a judgment against you, it will not attach to your homestead property. The word that’s used in the Florida constitution is this exemption from for sale of your creditors of your home in nours or passes through to your children. So your home is protected from creditors during your lifetime so that you don’t have to worry about credit card companies coming in and getting a judgment and taking your home and neither do your children if you even have judgments.
There is an exception, of course, in the event that the federal government has a lien, a tax lien, or a judgment against you, they can take your home and you cannot protect it from the claims of the United States of America. But your home is protected if you go through a bankruptcy, you can exempt out your homestead property and reaffirm your mortgage debt and preserve it; or if it’s paid for, you may even be able to keep it out of bankruptcy and be protected from the claims of creditors, and then whenever you pass away, it’s not subject to any judgment you have against you when it passes through to your children. You do have to leave it to your children or their heirs or grandchildren in order for them to get this exemption from the claims of creditors.
If you have any other questions about your homestead property and your creditors, give me a call at (727) 847-2288.
What Is A Joint Trust And Can I Establish One?
Video Summary
What is a joint trust and can I establish one? A joint trust is whenever usually husband and wife sign a trust agreement. Thereby you’ve gotta have two people, of course, to have a joint trust, particularly whenever they own all their assets jointly, and it’s not – you just need to contact an attorney to be able to establish a joint trust.
If the purpose of the joint trust is to avoid probate, you can do that through titling your assets as husband and wife and that way you avoid probate when the first one passes away. If the purpose of the joint trust is to establish a… who you want to receive the asset when both the husband and the wife passes away, that is very, very remote on a simultaneous death, and I really don’t recommend it on that basis.
Also if you do set up a joint trust, do not put your homestead property into a joint trust. There’s all sorts of problems that are associated with that. Also joint trust destroy what they call tenancy body entirety is to give you a certain amount of protection from creditors if there is a judgment against either husband or wife under Florida law. So I am not a big fan or I don’t usually recommend folks to set up joint trust. I think you can title your assets so that they can go to the survivor rather than having a joint trust. If you don’t want your assets to go to your spouse, you have a prenuptial agreement; you have a second marriage or something like that; then I suggest you have separate trust, one for the husband and one for the wife as far as that’s concerned. And again, not putting the homestead property in either trust.
So if you have any questions about establishing a trust, joint or otherwise, give me a call at (727) 847-2288. Thank you.