Will a Special Needs Trust Eliminate LISS Eligibility in Maryland?

People with disabilities or those close to them will often establish a special needs trust to provide them support. Some worry that having a trust will negatively impact the beneficiary’s eligibility for federal and state benefits like those provided by Low Intensity Support Services (LISS).

Fortunately, one of the main purposes of a special needs trust is to protect the recipient’s ability to get government benefits. Government programs like LISS, Medicare, and others assess a person’s assets to determine liability for benefits. However, the support one gets from a special needs trust is not considered an asset for eligibility purposes. Our team can determine what type of trust works best for your situation and draft it according to your needs.

For a free, private case assessment with our trust lawyers in Maryland, call Rice, Murtha & Psoras today at (410) 694-7291.

Can a Person Lose Eligibility to LISS if They Have a Special Needs Trust in Maryland?

When children and adults in Maryland with intellectual or developmental disabilities need support, they can turn to the state Developmental Disabilities Administration’s (DDA) LISS program. Through LISS, individuals with a disability can receive up to $2,000 for items and services to meet their needs. However, they often need much more support than what LISS can provide, which is why many after the benefactors of a “special needs” trust. If you are considering establishing a special needs trust, you might worry that it will jeopardize getting these benefits and others.

Fortunately, special needs trusts, often referred to as supplemental needs trusts, are specifically designed to provide financial support to individuals with disabilities, whether children or adults, without threatening their eligibility for government programs. The proceeds of the trust will not be considered assets by the administration to which you are applying. Our special needs trust attorneys in Maryland are here to help you establish an instrument that includes the necessary legal language so the government does not count the trust’s assets when assessing eligibility for benefits, such as LISS and various others.

Besides LISS, a trust helps to protect eligibility for other essential government assistance programs such as Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and Medicaid. These programs often have strict asset limits, meaning that if an individual with a disability has too many resources, they will lose access to their benefits. By placing assets into a special needs trust, the beneficiary can maintain eligibility while still receiving the benefits of the trust.

The Purpose of Special Needs Trusts and How to Create One in Maryland

While government benefits, like LISS and federal programs, can help some, a special needs trust can be designed to cover expenses not provided for by these programs. We can tailor this type of trust to fit the specific needs and circumstances of the individual with special needs. The trust’s provisions can outline the assets, how the trustee is expected to manage its assets, and any other desires the creator of the trust wants included. The creator can be someone close to the beneficiary, the beneficiary themselves, or an organization that manages many special needs trusts.

What a Special Needs Trust Does

A creator can essentially direct a special needs trust to provide the beneficiary with everything they need to live a full and independent life. The trust can provide money for educational costs if the beneficiary is in school, as well as recreational activities and travel. In many cases, the trust will include provision for additional therapy but can also include terms to provide money for clothes and other personal effects.

Put simply, a special needs trust can cover just about any costs associated with the beneficiary’s treatment and living expenses, allowing them to live a fuller life and receive the government benefits they deserve.

Types of Special Needs Trusts

There are a few types of special needs trusts that can be established depending on who is creating them. Each has different requirements, so which one is right for your situation will depend on the circumstances of your case.

When a person wants to provide money for someone else with a disability, they can create a “third-party” trust. For example, parents or grandparents who want to make sure a child has the support they need while getting government benefits will typically create a third-party trust in accordance with their wishes. While it is often close family members who create third-party trusts, Maryland laws put no requirement on who can create one for a beneficiary, so it could be a close friend.

A person with a disability can also establish a “first-party” trust for their own benefit. These trusts are created by federal law under 42 U.S.C. § 1396p(d)(4)(A) but will also protect the beneficiary’s eligibility for government benefits. If a person with special needs inherits assets or receives a legal settlement, they can place the benefits in a first-party trust without jeopardizing other benefits they are receiving or want to apply for. However, the person must be under 65 and meet the definition of disabled under § 1382c when creating the trust.

A third type of special needs trusts are known as pooled trusts. Under LAW, beneficiaries’ accounts are pooled together for investment purposes and typically managed by a fund or organization. However, the trust benefits are for the individuals who have invested in it to protect their government eligibility status.

How to Create a Special Needs Trust

Maryland places few restrictions on the creation of a special needs trust to encourage its use. With a transfer of property, a declaration by a property owner to transfer it, or an appointment of a trustee, you can create a special needs trust under Md. Code, Ests. & Trs. Art., § 14.5-401. While you can create one solely through word-of-mouth, our team can help you draft a document that will stand up in court if ever challenged.

Contact Our Special Needs Trusts Attorneys in Maryland Today for Help

For a confidential, free case review with our Maryland special needs trust attorneys, call Rice, Murtha & Psoras at (410) 694-7291.