Special needs trusts are a popular financial planning strategy used in Maryland by those looking to assist someone in need without jeopardizing a person’s eligibility for programs that require recipients to have income or asset levels below a set limit. The trust will cover financial needs not met by public assistance programs.
Beneficiaries could include:
- A person with permanent special needs
- Someone with special needs who might not need benefits in the future
- A person who might need Medicaid or SSI benefits in the future
- Someone who cannot manage their finances
The individual who creates the trust designates a trustee who controls the funds. The trustee is responsible for the distribution and management of said funds.
What are the benefits of a special needs trust?
Both the beneficiary and the individual who contributes to the trust benefit. The contributor knows that the funds they put in the trust will only be used for the expenses they stipulate. The beneficiary receives additional financial support without jeopardizing their eligibility for programs that are income restricted.
For the trust to be beneficial, the creator of the trust, or someone designated by them, must lay out the terms of the trust, ensuring that the purpose and directives of the documents related to the trust are clear. The irrevocable nature of the special needs trust protects them from being seized due to a lawsuit or by creditors.
How long will a person benefit from a special needs trust?
The special needs trust continues as long as the beneficiary is alive. After their death, the beneficiaries will receive what is left of the trust assets. With some trusts, the state’s Medicaid division is paid back for the services it gave to the beneficiary. If, after all payments are made, there are still assets left, these will be given to the beneficiary’s estate.
A special needs trust is a loving provision to protect the financial health and well-being of people who cannot care for themselves. Although setting up a trust takes time, it is time well spent.