Thinking about what happens to your loved one after you’re gone can be difficult for any Maryland resident. This can be even more stressful if your loved one has special needs or is otherwise incapable of supporting themselves financially.
Thankfully, there are estate planning tools that are designed to help with this very circumstance. Many people will set up a special needs trust – also known as a supplemental needs trust.
What is a supplemental needs trust?
A supplemental needs trust is set up to hold assets for a person with disabilities or special needs. Many people who are unable to work are on disability, but there is a limit as to how much money these people can have in their bank accounts at once.
As such, leaving behind an inheritance – or any amount of money really – puts this person’s eligibility for disability help at risk. That’s why guardians will set up supplemental needs trusts as a way to protect their benefits and give the individual extra financial support.
These trusts are exempt from taxes and probate. In addition, they can have special terms and conditions set up by the trustor in advance.
Different types of special needs trusts
Sometimes, a person who’s living on disability might set up their own special needs trust. In these cases, the beneficiary is responsible for managing the trust themselves and will have different types to choose from upon set up.
A third-party special needs trust is created and maintained by a third party. Usually, these are created for beneficiaries who are unable to make financial decisions due to a mental handicap.
What’s the right trust for your loved one?
What type of supplemental trust you set up for your loved one depends on their abilities, what kind of support they need, and your own budgetary constraints. It’s important to thoroughly research options and plan to contribute to the trust well in advance of when it’s needed.