Maryland Attorney for Special Needs Trust
Those who have loved ones with special needs typically want to protect them by ensuring they have the resources they need in any circumstance. Our attorneys can help you set up a trust that meets the specific needs of your beneficiary.
Special needs trusts are a great way to give your beneficiary the access they need to funds without jeopardizing other forms of assistance they receive, like Medicare. If you simply give someone money, it would be considered income and subject to assistance program limitations. Placing the funds in a trust will not be considered the beneficiary’s income. We can also help individuals with special needs establish their own trust. Perhaps your special needs arose from an accident for which you sued and recovered damages. Our team can help place your assets in a first-party trust so that it is not included in calculations for other government benefits.
For a private, free case review with our special needs trust attorneys, call Rice, Murtha & Psoras today at (410) 694-7291.
Types of Special Needs Trusts and What They Do in Maryland
A “special needs” trust is usually established to benefit a disabled loved one, allowing you to manage funds earmarked for their specific needs. These trusts can be tailored to align with the “grantor’s” intentions regarding how to utilize the assets while also designating the beneficiaries and the individual responsible for managing the trust. Notably, Maryland law encourages the creation of special needs trusts. According to Md. Code, Ests. & Trs. Art., § 14.5-1002(b), Maryland actively supports the use of special and supplemental needs trusts for individuals with disabilities of any age.
Third-party trusts can be created to benefit another person with special needs. However, an individual with special needs can also establish their own first-party trusts. Non-profit organizations can also create pooled special needs trusts for the benefit of several individuals with special needs. Our special needs trust attorneys can explain how each option works and which would best fit your circumstances. By doing so, the beneficiary can take advantage of the assets in the trust without losing any government assistance benefits they receive.
Third-Party Trusts
Third-party trusts are created by individuals who want to plan in advance for another person’s needs, typically a loved one with special needs. For example, parents of a disabled child can set up a third-party trust to manage both their current and future needs. However, anyone, including grandparents, siblings, or anyone else, can establish a third-party trust.
Trusts can be created in a will or within a living trust to bypass the probate process, keeping assets out of probate court distribution. Alternatively, a stand-alone trust can be established, allowing multiple donors to contribute while the creator is still alive. Unlike the other trusts, which become effective only after the creator’s death, a stand-alone trust accepts contributions from family and friends during the creator’s lifetime.
First-Party Trusts
First-party trusts, often known as “self-settled” trusts, are funded by the beneficiary themselves. These trusts are authorized under federal law, according to 42 U.S.C. § 1396p(d)(4)(A). Until 2015, only parents, grandparents, legal guardians, or a court order had the authority to create a first-party trust using the beneficiary’s assets. Thankfully, the 2015 Special Needs Trust Fairness Act widened this scope, allowing individuals to establish a trust for their own benefit.
These trusts are mainly used by individuals with special needs who either inherit money or property or receive a settlement from a lawsuit. For example, if someone with a disability wins damages due to an accident, they can place the lawsuit proceeds into a first-party trust to avoid counting it as income. These trusts are also valuable for those who develop a disability later and wish to qualify for public assistance that imposes strict income limitations.
However, individuals must possess both legal and mental competency when creating their own trust. Moreover, when the trust is created, the beneficiary must be under the age of 65 and qualify under the federal government’s definition of “disabled” as outlined in § 1382c. In addition, the trust is permitted to be established solely for the benefit of the designated beneficiary and cannot be utilized to support anyone else.
Pooled Trusts
Pooled special needs trusts differ significantly from the two types previously mentioned. Rather than having a family member or the beneficiary oversee the trust, a non-profit organization takes on the management and administration for multiple beneficiaries.
According to § 1396p(d)(4)(C), each beneficiary of a pooled trust must maintain a separate account. However, these accounts can be combined for investment and fund management purposes. A pooled trust is specifically designed to benefit individuals with disabilities who qualify for assistance.
If a beneficiary has remaining funds in their account upon their passing, they do not automatically remain with the trust. Instead, the trust is required to first reimburse the state for any benefits the beneficiary received through medical assistance programs like Medicaid or Medicare. Fortunately, both federal and Maryland laws do not impose an age restriction on beneficiaries of a pooled trust, allowing individuals aged 65 or older to be included.
How Our Attorneys Can Help You Create a Special Needs Trust in Maryland
Creating a special needs trust is a relatively straightforward process, but our attorneys can ensure it is established so it stands up to legal scrutiny. Under Md. Code, Ests. & Trs. Art., § 14.5-401, you can establish a trust by transferring property to a beneficiary or declaring that you are giving over the property to establish a trust.
While trusts can be created by word-of-mouth under § 14.5–406, our team can draft legal documents that set out the specific duties under it and what the assets must be used for. With a written legal device describing the trust’s details, it will be much easier to defend it if another person challenges it in court.
Contact Our Special Needs Trust Attorneys in Maryland Today for Help with Your Case
For a free, confidential case consultation with our special needs trust lawyers, call Rice, Murtha & Psoras at (410) 694-7291.