- Tel: 561-686-6200
- Fax: 561-686-0303
Special needs trusts and supplemental needs trusts have similar names and appear to serve a similar purpose: They are meant to offer resources to persons who also receive public benefits such as Medicare and Medicaid without upsetting their eligibility to receive those benefits. Are they actually the same thing, or do the terms describe two distinct legal instruments? Continue reading to learn about supplemental and special needs trusts, and call a knowledgeable West Palm Beach asset protection and elder law attorney if you have any questions.
The distinction between supplemental needs trusts and special needs trusts is mostly a matter of historical linguistics. As the field of special needs planning originally came about, trusts that were created for the benefit of people with disabilities were generally called supplemental needs trusts. The nomenclature was meant to indicate that the trusts were meant to supplement the assistance provided by government assistance programs like Medicare and Social Security, highlighting that they were not meant to replace or supplant the need for that assistance.
When federal legislation first allowed beneficiaries to fund their own needs trusts with their own income (first-party or self-settled trusts), some estate law practitioners decided to distinguish these new trusts from third-party trusts (typically funded by the parents of the beneficiary) by labeling self-settled trusts as special needs trusts (reflecting the needs of the beneficiary) and continuing to call the third-party trusts supplemental needs trusts. For the most part, this distinction has not caught on.
Currently, in Florida, the term “special needs trust” includes both self-settled/first-party special needs trusts and third-party special needs trusts. Supplemental needs trust is not the preferred term, although it is sometimes used interchangeably with special needs trust.
While supplemental and special needs trusts refer to the same thing in most jurisdictions, differing state laws complicate matters. In Minnesota, for example, “Supplemental Needs Trusts” refer to trusts established by a third party, often called “Third-Party Funded Supplemental Needs Trusts”). Trusts established by the beneficiary, on the other hand, are called “Special Needs Trusts” or “Self-Settled Special Needs Trusts.” The names serve to clarify the source of the funding.
As we’ve discussed, in jurisdictions like Florida, they are generally called “special needs trusts” but may be called “self-settled” or “third-party” special needs trusts to distinguish the source of funding. If you have any confusion about the trust you would like to establish in your locale, talk to an experienced elder law and estate planning attorney to make sure you fulfill the appropriate legal requirement.
A dedicated West Palm Beach estate planning and elder law attorney can help you and your family plan appropriately to maximize your chances to qualify for Medicaid and other needs-based governmental programs and to explore all of your options for daily living assistance and long-term care. If you are in need of a seasoned and comprehensive Florida asset protection and elder law attorney, contact the experienced West Palm Beach elder law attorneys Shalloway & Shalloway at 561-686-6200.