by Christian N. Horde, J.D., LLM

A special needs trust (SNT) is a specific trust that is designed to hold assets in a way that allows the beneficiary to preserve or obtain needs-based public benefits such as Medicaid. The assets in a special needs trust are managed by a trustee and used to maintain and increase the beneficiary’s quality of life by paying for products or services that are not covered by public benefits. Assets placed into a SNT are not countable for Medicaid eligibility asset requirements.

A spouse of an individual on Medicaid may only establish a SNT under their Last Will & Testament for the benefit of their spouse in the event of the well spouse predeceases the spouse receiving Medicaid. This trust known as a “Qualifying special needs trust” (QSNT).

The idea for a QSNT came out of Florida’s elective share laws. Under Florida law, a person cannot disinherit their spouse. Example: Your spouse is in a nursing home, and you try to disinherit the spouse because they are receiving Medicaid benefits (and you do not want them losing Medicaid benefits from an inheritance). The problem is that spouse has an elective share right. If they decline their elective share, Medicaid sees it as a transfer of assets subject to Medicaid penalty (similar to gifting assets).

With a QSNT, the healthy spouse can leave everything to spouse on Medicaid benefits (or at least 30%, per elective share rules), without the worry of them losing their public benefits. Furthermore, when a spouse on Medicaid passes away, there is no Medicaid payback with a QSNT, and the remaining assets are preserved for the next line of beneficiaries. Note: Under Florida law, you can only create a QSNT for a spouse under a Last Will & Testament.  

If you have a loved one who is already on public benefits or are in need of Medicaid planning, contact The Elder Center of Kirson & Fuller at 407-422-3017 today. Our experience elder law attorneys are well versed in public benefits planning and all types of special needs trusts to help you and your family.