Short answer: A special needs trust may allow you to leave money to a loved one with a disability without putting their Supplemental Security Income (SSI) or Florida Medicaid at risk. Because the trust owns the money, not your loved one, it generally isn’t counted against benefit limits. For families here in Vero Beach and Indian River County, it can be one of the most valuable planning tools available.
What Is a Special Needs Trust?
Think of it as a safe place to hold money for someone you love. A trustee you choose manages the funds and uses them for things that make life better: therapies, medical care Medicaid won’t cover, education, a computer, a family trip, or a ride to work.
Your loved one gets the benefit of the money, but they can’t demand it. That’s the key. Because they don’t control it, SSI and Medicaid typically don’t treat it as theirs.
Why Can an Inheritance Cost Someone Their Benefits?
This is the part that surprises most families. SSI generally limits a person to just $2,000 in countable resources. In Florida, SSI usually comes with Medicaid, which can include waiver services for adults with developmental disabilities.
So a well-meaning $25,000 inheritance from Grandma, a life insurance payout, or a savings account in your child’s name could push them over the limit. Benefits may stop, the money may end up spent on care Medicaid would have paid for, and getting back on benefits can take months. A properly drafted special needs trust may help prevent that.
What Types of Special Needs Trusts Are There?
It comes down to one question: whose money is going into the trust?
- Third-party trust (family money): This is the type of trust parents and grandparents typically set up, often as part of their will or living trust. When your loved one passes away, whatever is left can generally pass to the family members you choose without repaying Medicaid.
- First-party trust (their own money): This holds money that already belongs to the person with a disability, like a lawsuit settlement or an inheritance they received directly. It has to be set up before age 65, and Florida Medicaid gets repaid from what’s left at death.
- Pooled trust: A nonprofit manages the money in a shared fund, with a separate account for each person. It may be a good fit for smaller amounts or when there’s no family member to serve as trustee.
| Trust type | Whose money | Medicaid paid back? |
| Third-party | Family’s | No |
| First-party | Beneficiary’s | Yes |
| Pooled | Beneficiary’s | Yes, or kept by the nonprofit |
If the trust will hold a minor’s injury settlement, approval from a judge here in Indian River County may be required.
ABLE Account or Special Needs Trust?
Many families may benefit from having both. Florida’s ABLE program, ABLE United, may allow your loved one to save money without losing benefits. The first $100,000 generally doesn’t count for SSI. And as of January 2026, anyone whose disability started before age 46 (up from 26) may be eligible, which could open the door for many more Florida families.
ABLE accounts can work well for everyday spending and may even help with housing costs without reducing SSI. But yearly contributions are capped. A special needs trust has no annual contribution cap, so it may be a better fit for a larger inheritance. The trustee can move money into the ABLE account as needed.
Mistakes We See Families Make
- Leaving money directly to your loved one in a will, life insurance policy, retirement account, or bank account. In many cases, naming the trust instead may be the better choice.
- Leaving everything to a sibling with a promise to “take care of” their brother or sister. Legally, that money belongs to the sibling, and it may be exposed to their creditors or a divorce.
- Using a do-it-yourself trust with wording that could cause it to be counted as a resource.
- Not telling Grandma and Grandpa the trust exists, so their gifts may go to your child outright.
- Setting it and forgetting it. Benefit rules change, like the 2026 ABLE expansion, so reviewing the plan every few years is generally a good idea.
If your child is getting close to 18, our post on guardian advocacy and special needs planning in Florida walks through what to do next.
Frequently Asked Questions
Can a special needs trust own a car in Florida? Generally, yes. A special needs trust can typically buy and own a vehicle used to transport the beneficiary and pay its insurance and upkeep.
Can a parent be the trustee of a special needs trust? In many cases, yes. Parents often serve during their lifetime and name a sibling, friend, or professional trustee as successor.
What happens to the money when the beneficiary dies? A third-party trust can generally pass to the family members you name. A first-party or pooled trust must generally repay Florida Medicaid first.
Is it too late if my loved one already received an inheritance? Not necessarily. A first-party or pooled trust may protect eligibility, but act quickly because benefits can be affected the month the money arrives.
Talk to a Vero Beach Special Needs Planning Attorney
Jennifer Peshke helps families in Vero Beach and throughout Indian River County build special needs plans designed to help protect benefits today and provide security for the future. Learn more about our special needs planning and trust services and estate planning.
Protect your loved one’s future. Schedule a special needs planning consultation or call 772-231-1233.
This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship.