How to Create a Special Needs Trust in Maryland

How to Create a Special Needs Trust in Maryland

Creating a Special Needs Trust (SNT) in Maryland is an essential step for providing financial security to individuals with disabilities while preserving their eligibility for government benefits. Here’s a comprehensive guide on how to set up a Special Needs Trust in Maryland.

Understanding Special Needs Trusts

A Special Needs Trust is designed to benefit individuals with disabilities without jeopardizing their access to supplemental government benefits such as Medicaid and Supplemental Security Income (SSI). These trusts allow funds to be used for additional needs that government programs do not cover.

Step 1: Determine the Type of Trust

In Maryland, there are two main types of Special Needs Trusts:

  • First-Party Special Needs Trust: Funded with the disabled person's own assets, typically established through a personal injury settlement or inheritance.
  • Third-Party Special Needs Trust: Funded by someone else, like family members, to benefit the individual with a disability without affecting their eligibility for public assistance.

Step 2: Consult an Attorney

It's crucial to consult an attorney experienced in special needs planning and estate law in Maryland. They can provide invaluable advice on the specific requirements, legal implications, and the type of trust best suited for your situation.

Step 3: Draft the Trust Document

The next step involves drafting the trust document. This legal document should include:

  • Identification of the trust creator (grantor)
  • Details about the beneficiary
  • The trustee's powers and responsibilities
  • Specific provisions regarding how funds can be distributed to benefit the individual with disabilities

An attorney can help ensure the trust is compliant with Maryland laws and meets the necessary requirements for Special Needs Trusts.

Step 4: Fund the Trust

Once the trust is established, it needs to be funded. Depending on the type of trust, this may involve transferring assets such as cash, property, or investment accounts into the trust. Ensure that the trust’s funding complies with Medicaid and SSI guidelines to maintain eligibility for government benefits.

Step 5: Appoint a Trustee

Choosing the right trustee is essential. The trustee will manage the trust assets and make distributions that benefit the individual with disabilities. Ensure the selected trustee understands their responsibilities and the nuances of Special Needs Trusts. This person can be a family member, friend, or a professional fiduciary.

Step 6: Regularly Review the Trust

After creating the Special Needs Trust, it’s important to review it regularly. Changes in laws, financial situations, or the needs of the beneficiary may necessitate updates to the trust. Consult with your attorney periodically to ensure that the trust remains compliant with current regulations and continues to meet the beneficiary's needs.

Conclusion

Creating a Special Needs Trust in Maryland involves thoughtful consideration and planning. By taking the necessary steps—understanding the types of trusts, consulting an attorney, drafting the trust document, funding the trust, appointing a trustee, and regularly reviewing the trust—you can help secure a better future for individuals with disabilities while protecting their access to vital government benefits.