A special needs trust allows a disabled individual to get the financial assistance they need without having to rely solely on government assistance. Setting up a special needs trust also means that your Maryland loved one will still be able to receive benefits such as Supplemental Security Income or Medicaid.
Trusts and government assistance
Many benefit programs sponsored by the government have strict limits pertaining to assets and income. This means if the person receiving the benefits gets additional assets or gifts, they could forfeit their benefits. So, if your son or daughter receives SSI benefits due to a disability and the funds are used to help your child cover their living expenses, they may not be able to continue receiving government funds if you’ve provided funds in your estate via a special needs trust to help meet your child’s basic needs. Or, if you leave a substantial amount in your retirement account for your child when you pass away, your son or daughter may no longer be able to receive Medicaid or SSI if they accept the funds in your estate.
However, placing the money in a special needs trust allows your child to retain their government-issued benefits while still receiving the financial support you’ve prepared for them. Your son or daughter will have access to the money in the trust for the rest of their lives.
The advantages of a special needs trust
Establishing such a trust as part of your estate plan improves your loved one’s quality of life. Once you have a trust in place, you’ll likely have more peace of mind knowing that your child will be cared for financially throughout their life. The money does not forfeit any assistance your child receives from the government, and in some cases, creditors won’t be able to access the money to pay off your debts.
Your child should be able to use the money in the trust for needs that do not include shelter or food. It’s up to you to ensure the funds are utilized according to IRS rules, so be sure to keep all of your receipts for verification.