Parents of a special needs child, or people with special needs siblings or other family members with special needs, often write these loved ones into their wills, thinking they are acting in that disabled person’s best interest. After all, due to their disability, earning an income is extra difficult, or will be once they reach adulthood in the case of special needs minor child. However, what often happens is that after receiving this, potentially large, one time lump sum inheritance, the special needs individual gets kicked off of Supplemental Security Income (SSI) and their health coverage through Medicaid. Both of these federal programs are only available to people who have very little in the way of finances. SSI is only available to disabled people with limited income and limited resources ($2,000 in assets not including housing), according to the Social Security Administration. The same is true of Medicaid, as individuals earning over $1,436 are ineligible, according to the Maryland Department of Health. There is a workaround, however. You can leave money to your disabled child or loved ones when you pass, and ensure that they still remain eligible for these vital social programs.
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 Special Needs Trusts
- 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.