How the SSA Evaluates Trusts for SSI Eligibility: What Florida Families Need to Know

If your family includes a child or loved one with special needs, chances are high that you’re relying now or in the future on Supplemental Security Income (SSI) to help cover basic living expenses like housing, food, medical co-pays, transportation, and therapies. 

But here’s what many families don’t realize: creating a trust for your loved one can unintentionally disqualify them from receiving those benefits. 

SSA caseworkers are trained to closely evaluate trusts to determine if the assets held within them should be counted toward SSI’s strict $2,000 resource limit. Understanding how they make that decision is essential to building a legally sound, benefit-safe plan. 

Why Trusts Can Trigger SSI Loss  

To maintain SSI eligibility, an individual must have less than $2,000 in countable resources.

The SSA evaluates trusts to determine: 

• Whether the beneficiary can revoke or dissolve the trust 

• Whether the beneficiary has the authority to control or direct disbursements 

  
  

If either of those is true, even unintentionally, the entire value of the trust may be treated as if it belongs to the beneficiary, and SSI eligibility could be suspended or denied. 

Even worse, the trust itself may not be “fixable” after the fact without court intervention or full restructuring. 

The Types of Trusts That Get Reviewed 

First-Party Special Needs Trusts (Funded with the Beneficiary’s Assets) 

These are typically used when the individual receives a personal injury settlement or backpay from benefits. 

To be SSI-safe, these trusts must: 

• Be irrevocable 

• Be established before age 65 

• Be for the sole benefit of the beneficiary 

• Include a Medicaid payback clause for funds remaining at death 

Third-Party Special Needs Trusts (Funded by Others) 

These are funded by parents, grandparents, or other family members. If drafted correctly: 

• They are not countable resources 

• They do not require Medicaid payback 

• The beneficiary cannot have control over the trust or demand distributions 

These are ideal for long-term planning and can be used with wills or life insurance policies. 

Pooled Trusts 

Pooled trusts are managed by nonprofit organizations and offer a sub-account structure. These are often used for smaller inheritances or when a professional trustee is preferred. 

To be valid, the trust must be: 

• For the sole benefit of the beneficiary 

• Managed by a qualified nonprofit 

• Structured with appropriate payback provisions or charitable remainder clauses 

Revocable Living Trusts 

Common in general estate planning, these are almost always countable when the individual with special needs is the grantor or beneficiary. They are not suitable for preserving SSI. 

These aren’t frivolous; they’re what make life meaningful. And they’re often the first items cut if budgets are tight. 

Why Disbursements Still Matter 

Even if a trust is structured correctly, how the money is used matters. 

The SSA treats trust disbursements as follows: 

• Cash to the beneficiary counts as unearned income and reduces SSI dollar-for-dollar 

• Payments for food, rent, or utilities are considered in-kind support and maintenance (ISM) and can reduce SSI by up to one-third 

• Spending on non-essentials (e.g., phones, education, therapy, travel) usually does not affect benefits 

This is why trustee education is just as critical as legal drafting. An untrained trustee, even with the best intentions, can jeopardize eligibility. 

A Florida Family’s Wake-Up Call:

The Story from Sunrise, FL  

Maria and James created a trust for their adult son, Eric, after he received a $75,000 settlement from a car accident. Believing they were doing the right thing, they worked with a financial planner who used a generic revocable trust template with no special provisions. 

Eric’s SSI and Medicaid were suspended within two months. 

The trust allowed Eric to request distributions, and it lacked the necessary Medicaid payback clause. The family had to go to court, restructure the trust, and reapply for benefits, causing a 10-month gap in services that disrupted Eric’s therapies and housing plan. 

The emotional toll was heavier than the legal one. 

Florida-Specific Pitfalls 

Families in Florida face unique risks when setting up or administering trusts: 

• Waiver program eligibility may be impacted by rent or utility payments made from the trust 

• Guardianships often intersect with trust administration, especially for minors or adults under court supervision 

• Professional trustees unfamiliar with Florida's Medicaid systems may unknowingly misstep 

• ABLE accounts and trusts need to be coordinated to avoid duplication or conflict 

Even compliant documents can become problematic if the administration doesn’t follow Florida-specific best practices. 

Final Thoughts 

Trusts are powerful planning tools, but they are not set-it-and-forget-it documents. A trust that isn’t intentionally built and carefully maintained can do more harm than good. 

The SSA looks beyond the label of a trust and focuses on its actual structure and function. So should you. 

If your goal is to create long-term stability without compromising critical benefits, then building the right trust is just the beginning. Oversight, education, and coordination across your entire plan is what truly protects your loved one. 

Need help making sure your trust truly protects SSI benefits? 

Legacy Solutions Law Firm helps Florida families build SSI-safe special needs plans with confidence. 

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