Third-Party Special Needs Trusts in Florida: How to Provide for Your Child Without Risking Their Benefits
- Randy Narkir, Esq.
- May 7
- 3 min read
Planning for a child with special needs is one of the most important and emotionally charged responsibilities a parent can face. In Florida, where access to Medicaid, SSI, and other public benefits can mean the difference between adequate care and life-changing limitations, families must be strategic about how they pass on assets.
If you're a parent, grandparent, or loved one who wants to support a child with disabilities financially—without disrupting their eligibility for government assistance—a third-party special needs trust could be the solution.
What Is a Third-Party Special Needs Trust?
Unlike a first-party trust (funded with the beneficiary's own money), a third-party special needs trust is created using assets that never belonged to the person with disabilities. These trusts are typically funded by parents, grandparents, siblings, or other relatives who want to leave behind financial support.
Common funding sources include:
Lifetime gifts
Life insurance proceeds
Inheritance through wills or revocable trusts
Because the money never legally belonged to the beneficiary, third-party trusts enjoy one significant advantage: they are not subject to Medicaid payback after the beneficiary's death.
Why These Trusts Matter in Florida
Families across Florida face a delicate balancing act. Government benefit programs like Medicaid and Supplemental Security Income (SSI) have strict asset limits—typically no more than $2,000 in countable resources. If you leave money directly to your child with disabilities, you may unintentionally disqualify them from these benefits.
A third-party special needs trust allows your loved one to enjoy the benefit of your financial support without losing eligibility for critical services.
Funds in the trust can be used to pay for:
Therapies or medical equipment not covered by insurance
Specialized education or tutors
Travel and recreation
Housing support
Personal care attendants
And much more
Legal Requirements and Structure
To be valid under federal and Florida law, a third-party special needs trust must:
Be irrevocable, or become irrevocable upon the death of the grantor
Be designed to supplement, not replace, government benefits
Clearly prohibit distributions that would interfere with SSI or Medicaid eligibility
Appoint a reliable trustee (not the beneficiary) who understands both legal requirements and the family’s wishes
A letter of intent is often included alongside the trust to guide the trustee on the beneficiary’s routines, preferences, and life goals.
Real-Life Example: The Right Way to Plan
Consider the story of Maria and Carlos, a couple in Pembroke Pines with a 14-year-old son named Nico, who has a rare genetic disorder requiring lifelong care. They worry about what will happen if they’re no longer around to provide for him.
Instead of naming Nico as a direct heir in their wills or insurance policies, they set up a third-party special needs trust. They fund it with a life insurance policy and designate Maria’s sister as the trustee. This way, when the time comes, Nico will have continued access to therapies, transportation, and a safe place to live—without jeopardizing his Medicaid Waiver program benefits.
The trust even allows Maria and Carlos to designate who receives any leftover funds after Nico passes—ensuring the money stays within the family or goes to a charity they love.
A Legacy of Love and Intention
Planning for a loved one with special needs is never just about finances or paperwork. It’s about love, security, and dignity. By understanding how third-party special needs trusts work, you’ve taken a meaningful step toward protecting your child’s future—without sacrificing the support they rely on today.
Whether you’re just beginning to think about long-term care or you’ve been exploring your options for a while, know this: the decisions you make today can quietly shape your child’s tomorrow. And when done with care and clarity, they create something far greater than a legal document—they create peace of mind.
At Legacy Solutions Law Firm, we’re here when you’re ready—not with pressure, but with perspective. If you need a guide to help turn all this knowledge into something concrete and lasting, we’re just a conversation away.
We understand that this isn’t just about legal compliance—it’s about love, protection, and peace of mind.
Take the Next Step
If you're considering how to leave money to a loved one with disabilities in Florida, don’t leave it to chance.
Contact our Hollywood, Florida office today to schedule a confidential strategy session.
Let’s make sure your gift truly helps—without costing your loved one the support they need.
Let’s ensure your loved one receives the benefits they deserve and the financial protection they need.
Reference: SSA Program Operations Manual System (POMS) Section SI 01120.200 – Information on Trusts, Including Trusts Established with the Assets of Third Parties.
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