Third-Party Special Needs Trust in Maryland

If you have a family member with special needs or a disability who is on Supplemental Security Income (SSI) or Medicaid benefits, you can’t just leave assets to them in a will or trust. When they take ownership of these assets, their income could exceed SSI or Medicaid limits, causing them to lose benefits. Creating a third-party special needs trust is essential to provide for your loved one during your lifetime and after you pass away.

Turn to the experienced estate planning attorneys at Chesapeake Wills and Trusts to create a trust so you can provide for your loved one without interfering with their eligibility for government benefits.

Estate Planning to Benefit a Family Member With Special Needs

Many people create trusts as part of their estate planning. When the trust is created and you’ve funded the trust, the trust bypasses probate and the trustee distributes the trust assets after you pass away. However, a typical trust would make someone on government assistance ineligible for SSI or Medicaid benefits.

Instead, a third-party special needs trust retains the assets in trust so the beneficiary never owns the assets. Instead, the trustee distributes assets from the trust to pay for additional services beyond cost of living expenses, including:

  • Education
  • Travel
  • Medical and dental treatments
  • Entertainment and recreation
  • Medical equipment
  • Legal expenses
  • Caregiver expenses
  • Home repairs
  • Burial expenses

Creating a Third-Party Special Needs Trust in Maryland

To create a third-party special needs trust, you need a trust document. This document must include:

  • Names of the grantor (the family member or non-profit organization creating the trust), the trustee (trust manager), and beneficiary (your loved one)
  • Transfers of property into the trust and specific descriptions of the property
  • A declaration that the property is to be held in trust under the Maryland Discretionary Trust Act

Our trust lawyers can create either a testamentary or inter vivos (living) trust. A testamentary trust isn’t funded until after you pass away. If you create a living third-party special needs trust, you, family members, non-profit organizations, and other interested parties can all contribute to the trust during your lifetime.

We recommend an inter vivos trust so that family members who want to name your loved one as a beneficiary in wills or trusts can name the trust as the beneficiary instead. If they name your loved one as a beneficiary, your family member with special needs will have to create a first-party special needs trust to retain their government benefits.

What Happens When a Beneficiary Passes Away?

When a beneficiary dies, assets that remain in a third-party trust are not eligible for Medicaid Recovery or any other state or federal recovery programs. Instead, the grantor (if still alive), trustee, and trustee advisors can determine how to use the remaining assets in the trust.

If You Have a Loved One With Special Needs, Turn to Chesapeake Wills & Trusts for Estate Planning

Contact us today at Chesapeake Wills and Trusts to start the process of creating third-party special needs trusts in Maryland. Call us at 410-590-1900 or contact us online to schedule your consultation at our office in Glen Burnie, MD.

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