If you are the parents of a child with special needs, have siblings or other family members with special needs, you may be concerned about how to provide for their long term care and financial security. Many people write these loved ones into their wills, with the best of intentions, thinking they are acting in that disabled person’s best interest. After all, it may be difficult for a person with special needs or other disability to earn their own income, now or in the future. However, the family could actually be endangering the long term care of a person with special needs by acting without legal guidance. Here are a few reasons why you should consider a special needs trust, if you have a family member with special needs.
Not to long ago, we had a case come to us where a client left a large, one time lump sum inheritance to a family member with special needs. They did not realize the implications of this action and sought our help. Unfortunately, the special needs individual was disqualified from receiving Supplemental Security Income (SSI) and they were no longer eligible for health coverage through Medicaid. Both of these federal programs are only available to people who have limited finances. SSI is only available to disabled people with limited income and limited resources according to the Social Security Administration. The same is true of Medicaid, according to the Maryland Department of Health. So, a lump sum inheritance can quickly change their circumstances and impact their ability to qualify for such programs, now or perhaps in the future. In these cases, a special needs trust is a great solution.
What is a Special Needs Trust?
A special needs trust is used to provide for your disabled minor or adult child, or your disabled family member, without making them ineligible for SSI or Medicaid. The money in the trust is not readily available for the beneficiary (the disabled loved one), and is in complete control of the trustee, who acts in the beneficiary’s best interest. As such, the money in the trust is not technically an available resource, as the money in trust can only be used for the disabled person’s incidental expenses and other expenses not covered by Medicaid. Additionally, the money in the special needs trust cannot be used for food, shelter, or clothing, as that is what SSI is used for. The special needs trust can be used for everything else, from vacation to education to transportation.
Three Types of Trusts for Special Needs
- Third Party—The most common type of special needs trust, a third party trust is one in which someone other than the beneficiary puts money into the trust. For example, the parents of a special needs child put money into a trust for their child.
- Self-Settled—The beneficiary puts their own money into a trust of their creation. This money could be from a lawsuit verdict or personal injury claim, a workers’ compensation claim, or inheritance.
- Pooled—A trust created by a non-profit which a disabled person can join.
Our Maryland Special Needs Trust Attorneys Can Help
If you have a family member with special needs, ensure that the assets you leave behind provide care without hindering their benefits or future SSI and Medicaid eligibility. Contact the Maryland special needs trust lawyers at Frame & Frame for assistance. Call 410-255-0373 to set up a consultation today.