If you have a child or family member with special needs, leaving them an outright inheritance could actually disqualify them from essential government benefits like Medicaid and Supplemental Security Income. A special needs trust preserves their eligibility while providing supplemental support for a better quality of life.
How a Special Needs Trust Works
A special needs trust — also called a supplemental needs trust — holds assets for the benefit of someone with a disability without counting those assets toward benefit eligibility limits. The trustee can use trust funds for expenses not covered by government programs: recreation, education, personal care items, travel, and more. The key is that the trust supplements rather than replaces government benefits.
Types of Special Needs Trusts
A third-party trust is funded by someone other than the beneficiary — typically parents or grandparents — and has no payback requirement to Medicaid. A first-party trust is funded with the disabled person’s own assets and must include a Medicaid payback provision. Each has different rules and applications depending on the situation.
Planning for a loved one with special needs requires specialized knowledge. Contact SoMD Estate Planning to discuss your family’s options.