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Speak with one of our Annapolis special needs trust lawyers in a complimentary consultation. Schedule yours by calling (443) 335-9661 or contacting us online.
A special needs trust is a legal arrangement allowing a person with disabilities to receive assets without risking their eligibility for government benefits, including Medicaid, Supplemental Security Income (SSI), and other programs. The assets in the trust are not counted towards the individual's income and cannot be used for anything that would jeopardize their government benefits. Special needs trusts are also effective tools for protecting assets.
Types of Special Needs Trusts
First Party
This type of trust is funded with an individual's own assets, such as an inheritance or personal injury settlement. Assets in it are not considered part of the individual's financial resources, which enables them to qualify for government benefits. Strict rules apply to first-party special needs trusts. For instance, they must be irrevocable and created when the beneficiary is younger than 65. It is important to note that after a trust's beneficiary has passed, its funds must generally be used to reimburse the government for the benefits it provided.
Third Party
Funded by someone other than the beneficiary, third-party trusts are commonly established by parents and grandparents who want to leave money and property to loved ones with special needs. The assets in this kind of trust do not count against the beneficiary’s income or resources, so they can continue receiving necessary government assistance. Unlike first-party trusts, these do not have an age limit. Additionally, when a beneficiary passes, the assets in the trust can pass to others instead of being used to repay the government.
Pooled
These are managed by nonprofit organizations that pool funds from many individuals. No matter a person’s age, they can benefit from a pooled trust. Each person who contributes to the trust has a separate account, which can be for themselves or a loved one. The funds in these separate accounts (sub-accounts) can only be used for the benefit of a single person.
When to Create a Special Needs Trust
Anyone can create a special needs trust at any time. However, there are some important considerations to keep in mind:
- Age of the beneficiary: As previously mentioned, first-party trusts must be created before the beneficiary turns 65.
- Potential future inheritance: If an individual with special needs is set to inherit money or property, it may be beneficial to establish a third-party trust beforehand to protect their government benefits.
- Changes in health or financial status: If someone's health or financial situation changes and they become eligible for government benefits, creating a special needs trust can help them maintain those benefits while still having access to additional assets.
How Our Annapolis Special Needs Lawyers Can Serve You
Do you have questions about establishing a trust, such as what kind is most beneficial and what you must do to prepare? Are you concerned about an existing trust and want to ensure it complies with relevant laws? Our team at Hartman - Attorneys at Law has the answers.
We can help you with the following and more:
Our firm provides highly personalized services that underscore our investment in our clients' well-being, financial security, and peace of mind. To learn how we can serve you specifically, arrange a complimentary consultation. We can conduct these meetings in person or virtually, making it possible for you to partner with us regardless of where you are in Anne Arundel County or any other part of Maryland.
For guidance in all things to do with special needs trusts, call (443) 335-9661 or connect with us online.