Special needs planning covers a lot of what many Maryland people with disabilities require. An example of special needs planning is a disabled person moving out on their own with government assistance. Another is getting a specialized van for transportation.
Asset management is important when it comes to a special needs trust. When deciding on special needs planning, people should think about the type of income there is. If a person has income streams and no real assets, a trust could be necessary. If the person with a disability can’t handle financial affairs, a trust could be important. A trust can help with the financial side while the special needs person handles other aspects themselves. Another reason to set up a trust is to protect people from exploitation.
A primary reason for a special needs trust is access to certain public benefits. Benefits with financial eligibility will usually require a trust. When applying for Medicaid, a person can’t have more than $2,000 to their name in assets, but not all benefits have strict limitations. Depending on which benefits a person will need, there might be a better option.
Third-party special needs trust
There are many types of special needs trusts that each cover different areas. A third-party special needs trust is the one parents set up for their children or other family members. A parent or grandparent establishes this trust for special needs planning instead of the beneficiary or spouse. The trust shouldn’t hold the beneficiary’s assets. Combining the beneficiary’s and parents’ assets can be problematic.
The beneficiary can’t be the trustee of a third-party special needs trust because they can’t have control of the assets. A trustee can deny payment to the beneficiary to keep the money correct for some benefits. Another benefit of using a third-party special needs trust is there isn’t a payback requirement. When the child dies with money left in the trust, programs like Medicaid can’t claim funds. So the trustee can pass the remaining assets to another loved one without any extra fees.