Special needs trust for the disabled under the age of 65

Attorney Tom Olsen: Let's talk about another type of special needs trust because this one I'm not quite as familiar with as you are. If somebody was on governmental benefits, and Mom, without doing a special needs trust, left that person that's on Social Security or SSI Medicaid left that person $100,000. Well, we know that, that Social Security Disability Medicaid would end because now they've got $100,000. There's a workaround to fix this poor planning that Mom has done.

Attorney Robert Hidock: There is. If the persons under 65, it's a special needs trust for the disabled under 65. It is very similar to the trust that we just discussed. The only caveat to that is, the state of Florida has to become the beneficiary of it for any kind of recovery or reimbursement. Once they receive their recovery, then it can pass if there's any money left to their beneficiaries.

Attorney Tom Olsen: Okay. With the initial special needs trust we talked about where mom has properly set up a special needs trust, it could say, "This money's for the benefit of my son for as long as he lives. When he passes away, whatever's leftover goes to my other kids and my grandkids," for example. If Mom did not properly set up a special needs trust, but simply leaves $100,000 outright to her son. He could then take that and put it into a special needs trust and get the benefit of it. It says that it must say that upon his death, whatever's leftover must first be used to pay back Social Security and Medicaid.

Attorney Robert Hidock: Correct. Again, it's a supplemental trust, and the trustee can buy whatever they want for the person that's on Medicaid. If there's anything left, the state gets it.

Attorney Tom Olsen: Okay. Could the trustee in that situation literally buy the person a home to live in?

Attorney Robert Hidock: Technically, if there was enough money in the trust, yes.

Attorney Tom Olsen: Okay. Great information there. I've always been a bit surprised at how many people come to us for estate planning, who do have children that are on SSI Disability, Medicaid. This is an important issue for a lot of people.

Attorney Robert Hidock: It's important that they actually bring that up to us when they're having your initial consult with you. It's a lot easier to fix the problem now and do proper planning than it is to do it almost at crisis time.

Attorney Tom Olsen: Yes. Folks, we're the Olsen Law Group in Orlando and I'm talking to Attorney Robert Hidock.