By your situation · Families with a beneficiary who receives SSI or Medicaid, or may apply

Special-needs planning

How a trust, a will and an ABLE account hold property for a beneficiary who receives SSI or Medicaid, with the federal and Florida rules cited.

Supplemental Security Income (SSI) is available to an aged, blind or disabled individual whose resources, other than excluded resources, do not exceed $2,000, or $3,000 for an individual living with a spouse (42 U.S.C. § 1382(a)(1)(B), (a)(2)(B), (a)(3)). Property left outright to a beneficiary belongs to the beneficiary. A trust holds property for the beneficiary instead.

Third-party trusts. The Social Security Administration defines a third-party trust as a trust established with the assets of someone other than the beneficiary or the beneficiary's spouse, for example a grandparent's trust for a grandchild (SSA POMS SI 01120.200B.16). Trust principal is not an SSI resource if the beneficiary has no legal authority to revoke or terminate the trust or to direct the use of the principal for the beneficiary's own support and maintenance (POMS SI 01120.200D.2). The federal Medicaid trust rules apply to a trust established by the individual, the individual's spouse, or a person acting for or at the direction of either, using the individual's assets, other than by will (42 U.S.C. § 1396p(d)(2)(A)).

First-party trusts and pooled trusts. A trust holding the assets of a disabled individual under 65, established for the individual's benefit by the individual, a parent, a grandparent, a legal guardian or a court, is excluded from the Medicaid trust rules if the State receives all amounts remaining at the individual's death, up to the total medical assistance paid (42 U.S.C. § 1396p(d)(4)(A)). A trust established and managed by a nonprofit association that keeps a separate account for each beneficiary and pools the accounts for investment has a parallel exception (42 U.S.C. § 1396p(d)(4)(C)). POMS SI 01120.200 refers to SI 01120.203 for trusts that contain the individual's own assets (SI 01120.200B.12).

Distributions. Under POMS SI 01120.200E.1, cash paid from the trust to the beneficiary is unearned income. Food or shelter received by the beneficiary because of a payment to a third party is in-kind support and maintenance, valued under the presumed maximum value rule. Payments to third parties that result in the beneficiary receiving non-cash items other than food or shelter are in-kind income if the items would not be partially or totally excluded non-liquid resources if retained into the month after receipt (POMS SI 01120.200E.1.a). Disbursements to third parties are otherwise generally not income, and the list of those that may not count includes educational expenses, therapy, transportation, professional fees, medical services not covered by Medicaid, phone bills, recreation and entertainment (POMS SI 01120.200E.1.c).

Florida law. A trustee administers the trust in accordance with its terms and purposes (§ 736.0801, Fla. Stat. (2026)). When a trustee may make discretionary distributions, a creditor of the beneficiary may not compel a distribution or reach the beneficiary's interest (§ 736.0504(2), Fla. Stat. (2026)). This page cites the SSI rules in POMS SI 01120.200 and the federal Medicaid trust rules in 42 U.S.C. § 1396p(d). It does not address other benefit programs.

The implications

What this means for you

An outright bequest is the beneficiary's property. SSI eligibility requires nonexcluded resources of $2,000 or less for an individual with no spouse in the household (42 U.S.C. § 1382(a)(1)(B)(ii), (a)(3)(B)). A bequest to a trust the beneficiary cannot revoke, terminate, or direct for support is not the beneficiary's resource (POMS SI 01120.200D.2).
What the beneficiary controls decides the resource question. Trust principal is a resource if the beneficiary can revoke or terminate the trust and use the funds for food or shelter, can direct the use of the principal for support and maintenance under the trust's terms, or can sell the right to payments because the trust lacks a valid spendthrift clause (POMS SI 01120.200D.1.a).
Each distribution has its own SSI effect. Cash to the beneficiary is unearned income. Payments that supply food or shelter are in-kind support and maintenance valued under the presumed maximum value rule. Payments to third parties for non-cash items other than food or shelter are in-kind income if the items would not be partially or totally excluded non-liquid resources if retained into the next month (POMS SI 01120.200E.1.a). Other disbursements to third parties are generally not income (POMS SI 01120.200E.1.c).
The trustee's discretion is a legal term of the trust. A discretionary trust is one in which the trustee has full discretion over the time, purpose and amount of distributions and the beneficiary has no control (POMS SI 01120.200B.1). Under Florida law a creditor, including a child or spouse with a support order, cannot compel a discretionary distribution (§ 736.0504(2), § 736.0503(2)(a), Fla. Stat. (2026)).
Gifts from relatives can be directed to the same trust. A will may make a valid devise to the trustee of a trust that is evidenced by a written instrument in existence when the will is made, if the will identifies the instrument (§ 732.513(1), Fla. Stat. (2026)). The devised property becomes part of the trust principal unless the will provides otherwise (§ 732.513(5)).
Property of the beneficiary placed in a trust is treated differently from property of others. When a trust holds both the individual's assets and other persons' assets, the Medicaid trust rules apply to the portion attributable to the individual (42 U.S.C. § 1396p(d)(2)(B)). SSA warns that a trust described as third-party but funded with the beneficiary's property is a grantor trust (POMS SI 01120.200B.16).

The documents

Documents that apply

Each path below links to its page with the statutes and rules that apply.

Estate Package + Third-Party SNT

Family trust with a supplemental needs trust for the beneficiary, and a pour-over will

Standalone Third-Party SNT

A supplemental needs trust for a family that already has a primary trust

The pitfalls

Common problems

Each item cites the statute or rule it comes from.

Naming the beneficiary directly in a will, or a beneficiary designation. The property is the beneficiary's and counts under the $2,000 SSI resource limit (42 U.S.C. § 1382(a)(3)(B)). Death benefits may instead be made payable to the trustee of a trust in existence at death (§ 733.808(1), Fla. Stat. (2026)).
Giving the beneficiary control over principal. Trust principal is a resource if the beneficiary has legal authority to revoke or terminate it, can direct its use for support and maintenance, or can sell the right to payments (POMS SI 01120.200D.1.a).
Paying the beneficiary cash. Cash paid from the trust to the beneficiary, including to a personal debit card, is unearned income in the month received (POMS SI 01120.200E.1.a).
Paying for food or shelter without recognizing the SSI effect. Food or shelter the beneficiary receives through a trust payment to a third party is in-kind support and maintenance valued under the presumed maximum value rule (POMS SI 01120.200E.1.b). A trust purchase of a home or payment of a mortgage is evaluated under POMS SI 01120.200F.
Mixing the beneficiary's own funds into a third-party trust. The Medicaid trust rules apply to the portion of a mixed trust attributable to the individual's assets (42 U.S.C. § 1396p(d)(2)(B)). The first-party exception requires payback to the State for the total medical assistance paid (42 U.S.C. § 1396p(d)(4)(A)).
Using the first-party exception after age 65. The (d)(4)(A) exception covers a trust containing the assets of a disabled individual under age 65 (42 U.S.C. § 1396p(d)(4)(A)).
A beneficiary with authority to direct the principal for support. SSA treats principal as a resource if the beneficiary can direct its use for support and maintenance under the trust's terms (POMS SI 01120.200D.1.a), so the beneficiary should not hold that power. The trust's successor trustee is filled by the terms, then the qualified beneficiaries by unanimous agreement, then a court (§ 736.0704(3), Fla. Stat. (2026)).
Opening an ABLE account without checking eligibility. An eligible individual is entitled to disability benefits under title II or XVI with onset before age 46, or has a filed disability certification with onset before 46 (26 U.S.C. § 529A(e)(1)-(2)). A designated beneficiary is limited to one ABLE account (26 U.S.C. § 529A(b)(1)(B)).

The FAQ

Frequently asked questions

What is the difference between a first-party and a third-party special needs trust?+−

A third-party trust is established with the assets of someone other than the beneficiary or the beneficiary's spouse (POMS SI 01120.200B.16). A first-party trust contains the beneficiary's own assets. A first-party trust for a disabled individual under 65, established by the individual, a parent, a grandparent, a legal guardian or a court, is excluded from the federal Medicaid trust rules only if the State receives all amounts remaining at the individual's death up to the total medical assistance paid (42 U.S.C. § 1396p(d)(4)(A)). The Medicaid trust rules apply to a trust established with the individual's assets (42 U.S.C. § 1396p(d)(2)(A)). The statute sets no payback condition for a trust funded only with others' assets.

Can the trust pay for housing?+−

A trust can pay, but SSA treats the result as in-kind support and maintenance. Food or shelter the beneficiary receives through trust payments to a third party is in-kind support and maintenance valued under the presumed maximum value rule (POMS SI 01120.200E.1.b). A trust payment for a home or a monthly mortgage is evaluated separately under POMS SI 01120.200F. Payments to third parties that result in non-cash items other than food or shelter are in-kind income if the items would not be partially or totally excluded non-liquid resources if retained into the month after receipt (POMS SI 01120.200E.1.a). Other disbursements to third parties are generally not income, and SSA lists educational expenses, therapy, transportation, professional fees, medical services not covered by Medicaid, phone bills, recreation and entertainment as examples (POMS SI 01120.200E.1.c).

Does cash from the trust affect SSI?+−

Yes. Cash paid directly from the trust to the beneficiary is unearned income, and a disbursement to the beneficiary's personal debit card is treated the same way (POMS SI 01120.200E.1.a). SSA counts the amount as unearned income for the month it is received or added to the card.

Who can serve as trustee?+−

The Florida statutes read for this page set duties and the order for filling a vacancy, not qualifications. The trustee administers the trust in good faith in accordance with its terms and purposes and the interests of the beneficiaries (§ 736.0801, Fla. Stat. (2026)) and keeps the qualified beneficiaries reasonably informed (§ 736.0813, Fla. Stat. (2026)). A vacancy is filled by the person the trust names, then by unanimous agreement of the qualified beneficiaries, then by the court (§ 736.0704(3)). For SSI, the beneficiary should not have authority to revoke or terminate the trust or to direct the principal for the beneficiary's own support (POMS SI 01120.200D.1.a).

What happens to the money in the trust when the beneficiary dies?+−

In a third-party trust the trust's terms control the remainder, and the trustee administers the trust in accordance with its terms (§ 736.0801, Fla. Stat. (2026)). In a first-party trust that relies on the (d)(4)(A) exception, the State receives the remaining amounts up to the total medical assistance paid (42 U.S.C. § 1396p(d)(4)(A)). In an ABLE account, remaining amounts up to the Medicaid assistance paid after the account was established, net of premiums, go to the State on its claim (26 U.S.C. § 529A(f)). Florida law bars a Medicaid claim against funds in a Florida ABLE account except as federal law requires (§ 1009.986(7)(b), Fla. Stat. (2026)).

What is an ABLE account and how does it differ from a trust?+−

An ABLE account is an account owned by an eligible individual and maintained under a qualified state program (26 U.S.C. § 529A(e)(6)). The designated beneficiary is the owner, a beneficiary is limited to one account, and contributions in a year are limited to the amount tied to the gift tax annual exclusion (26 U.S.C. § 529A(b)(1)(B), (b)(2)(B)). Qualified disability expenses include education, housing, transportation, health, employment training, assistive technology, personal support services, and funeral and burial expenses (26 U.S.C. § 529A(e)(5)). The Florida ABLE program is administered by Florida ABLE, Inc., and the beneficiary must reside in Florida or a contracting state when the account is opened (§ 1009.986(3)(a), (4)(b)3., Fla. Stat. (2026)). Money paid into or out of the Florida ABLE trust fund is exempt from claims of the beneficiary's creditors while the participation agreement is in effect (§ 1009.986(6)).

Can grandparents or other relatives leave money to the beneficiary?+−

They can leave it to the beneficiary's trust instead. A will may devise property to the trustee of a trust that exists in a written instrument when the will is made, if the will identifies the instrument (§ 732.513(1), Fla. Stat. (2026)). The devised property becomes part of the trust principal unless the will provides otherwise (§ 732.513(5)). SSA's definition of a third-party trust gives the example of a grandparent's trust for a grandchild (POMS SI 01120.200B.16).

What is a pooled trust?+−

A pooled trust is established and managed by an organization and pools the assets of multiple individuals held in separate accounts for investment and management (POMS SI 01120.200B.9). For Medicaid, a pooled trust of a disabled individual's assets must be established and managed by a nonprofit association, keep a separate account for each beneficiary, be established by the individual, a parent, grandparent, legal guardian or a court, and pay the State from amounts not retained by the trust at the beneficiary's death up to the total medical assistance paid (42 U.S.C. § 1396p(d)(4)(C)).

Can creditors reach a special needs trust?+−

If the trustee may make discretionary distributions, a creditor of the beneficiary may not compel a distribution or attach the beneficiary's interest (§ 736.0504(2), Fla. Stat. (2026)). A spendthrift provision is unenforceable against a child, spouse or former spouse with a support or maintenance judgment, against a judgment creditor who provided services protecting the beneficiary's interest, and against a claim of this state or the United States to the extent law provides (§ 736.0503(2), Fla. Stat. (2026)). Except as § 736.0504 provides, such a claimant may obtain a court order attaching present or future distributions, as a last resort for support claimants and judgment creditors (§ 736.0503(3)). Section 736.0504(2) bars a creditor, including one described in § 736.0503(2), from compelling a distribution that is subject to the trustee's discretion or reaching the beneficiary's interest in it. The beneficiary may sue the trustee for abuse of discretion (§ 736.0504(4)).

What if the surviving spouse is ill or disabled?+−

Florida's elective share law recognizes a qualifying special needs trust for an ill or disabled surviving spouse, established with court approval before or after the decedent's death, with court approval not required if the aggregate value is under $100,000 (§ 732.2025(8), Fla. Stat. (2026)). Property held in a qualifying special needs trust on the date of death is excluded from the elective estate (§ 732.2045(1)(g)), and property held for the spouse in one is applied first toward the elective share at its full principal value (§ 732.2075(1)(e), § 732.2095(2)(e)).

In short

Whether trust property counts against SSI or Medicaid depends on who funded the trust, what the beneficiary can control, and what each distribution buys. The rules are in the Sources below.

Last checked: October 19, 2026

Sources

Each source below was read on the date shown. Statute links open the 2026 edition on the Florida Senate site.

42 U.S.C. § 1396p(d), Liens, adjustments and recoveries, and transfers of assets. Cornell Law School, Legal Information Institute. Medicaid trust rules; (d)(4)(A) and (d)(4)(C) exceptions and State payback
42 U.S.C. § 1382(a), Eligibility for benefits. Cornell Law School, Legal Information Institute. $2,000 and $3,000 resource limits
SSA POMS SI 01120.200, Information on Trusts, Including Trusts Established Prior to January 01, 2000, Trusts Established with the Assets of Third Parties, and Trusts Not Subject to Section 1613(e) of the Social Security Act (effective May 6, 2024). Social Security Administration. Third-party trusts; when trust principal is a resource; effect of distributions
26 U.S.C. § 529A, Qualified ABLE programs. Cornell Law School, Legal Information Institute. ABLE account eligibility, contribution limit, qualified disability expenses, State claim at death
§ 1009.986, Fla. Stat. (2026), Florida ABLE program. The Florida Senate. Florida ABLE program, creditor exemption, Medicaid recovery limit
§ 736.0503, Fla. Stat. (2026), Exceptions to spendthrift provision. The Florida Senate. Claims that can reach a trust despite a spendthrift provision Plain-English page on this site.
§ 736.0504, Fla. Stat. (2026), Discretionary trusts; effect of standard. The Florida Senate. Creditors cannot compel discretionary distributions Plain-English page on this site.
§ 736.0704, Fla. Stat. (2026), Vacancy in trusteeship; appointment of successor. The Florida Senate. Order for filling a trustee vacancy Plain-English page on this site.
§ 736.0801, Fla. Stat. (2026), Duty to administer trust. The Florida Senate. Trustee administers under the trust's terms
§ 736.0813, Fla. Stat. (2026), Duty to inform and account. The Florida Senate. Trustee's duty to inform qualified beneficiaries Plain-English page on this site.
§ 732.513, Fla. Stat. (2026), Devises to trustee. The Florida Senate. Will devise to an existing trust Plain-English page on this site.
§ 733.808, Fla. Stat. (2026), Death benefits; disposition of proceeds. The Florida Senate. Insurance and benefit plan proceeds payable to a trustee
§ 732.2025, Fla. Stat. (2026), Definitions. The Florida Senate. Qualifying special needs trust for a spouse
§ 732.2045, Fla. Stat. (2026), Exclusions and overlapping application. The Florida Senate. Qualifying special needs trust excluded from the elective estate
§ 732.2075, Fla. Stat. (2026), Sources from which elective share payable; abatement. The Florida Senate. Qualifying special needs trust applied to the elective share
§ 732.2095, Fla. Stat. (2026), Valuation of property used to satisfy elective share. The Florida Senate. Value of a qualifying special needs trust interest

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