What happens to a special needs trust when the beneficiary dies?

What happens to a special needs trust after the beneficiary dies depends on the type of special needs trust. For a third-party special needs trust, the trust itself determines what happens to the assets. For a first-party special needs trust, the trust assets will be used to repay Medicaid.

What happens to a third party special needs trust if the beneficiary dies?

After the beneficiary of a third-party special needs trust dies, the trust itself determines what happens to the assets. The trust might have another beneficiary still supported by the trust assets. Alternatively, the trust might pay out to a new beneficiary or separate trust. The key here is that the the answer will be found in the declaration of trust, which determines how all the trust assets are to be used.

What happens to a D4A disability trust if the beneficiary dies?

After the beneficiary of a D4A disability trust dies, all assets remaining in the trust are used to repay Medicaid. In other words, the state of Florida takes everything still in the trust. The only exception is if the assets in the trust are greater than the Medicaid debt still owed. If that happens, the trust assets can go to other beneficiaries.

Unfortunately, there is no legal way to get around the Medicaid repayment in D4A disability trusts. The trusts are required by federal law to contain language requiring this repayment. The best option for most D4A disability trustees is to spend as much of the assets as possible on the beneficiary before the beneficiary passes away.

What happens to a D4C pooled trust if the beneficiary dies?

After the beneficiary of a D4C pooled trust dies, the trust repays the state of Florida for Medicaid, except some amount can be retained by the pooled trust to help other disabled beneficiaries. Like the D4A disability trust, any assets remaining in the trust will almost certainly not go to the family or loved ones of the disabled individual who passed away.