Understanding Special Needs Trusts
At the Mulinazzi Law Office, we cater to every families’ unique makeup when addressing estate planning and asset protection. Families with beneficiaries who have special needs must especially consider long term planning to ensure that special needs beneficiaries will be well taken care of after the death of a parent or guardian.
A Special Needs Trust (SNT) is a legal arrangement designed to manage assets for the benefit of a person with a disability. It ensures that the beneficiary’s specific needs are met without jeopardizing their eligibility for essential government benefits like Supplemental Security Income (SSI) and Medicaid which are important assets.
What Types of Special Needs Does A Special Needs Trust Cover?
A Special Needs Trust can cover a broad range of expenses that enhance the beneficiary’s quality of life, including but not limited to:
- Medical and Dental Expenses
- Services and treatments not covered by Medicaid or private insurance
- Special therapies such as physical and occupational therapy
- Medical equipment and supplies
- Educational and Vocational Training
- Tuition for special education programs
- Vocational training and related expenses
- Assistive technology for learning
- Personal Care and Support Services
- Payment for personal care attendants
- Companion services
- Special dietary needs
- Recreational and Cultural Experiences
- Funds for recreational activities like sports and hobbies
- Vacations and travel
- Cultural experiences such as concerts and museums
- Transportation
- Purchase and maintenance of specially adapted vehicles
- Public transportation costs
- Housing and Utilities
- Rent for a private residence
- Home modifications to accommodate a disability
- Utility bills not covered by other benefits
- Miscellaneous Expenses
- Legal Fees
- Guardian or advocate fees
- Other items or services that enhance the beneficiary’s quality of life
- Everyday living expenses
Why a Special Needs Trust is Essential
The main function of a Special Needs Trust is to ensure that the beneficiary does not lose eligibility for SSI and Medicaid. These programs have stringent income and asset limits, and an inheritance or large gift could disqualify a beneficiary from receiving these vital benefits. By placing assets in a Special Needs Trust, the beneficiary can maintain eligibility for these programs while also having funds available for additional needs.
Defining Special Needs
In the context of a Special Needs Trust, “special needs” generally refers to the requirements necessary for a person with a disability to lead a fulfilling and dignified life. While the Social Security Administration (SSA) defines disability for SSI purposes as a medically determinable physical or mental impairment that results in marked and severe functional limitations, the specific needs covered by a trust can vary widely based on the individual’s circumstances and are not strictly defined by the SSA.
Types of Special Needs Trusts
At the Mulinazzi Law Office, we can draft the following special needs trusts:
- First-Party Special Needs Trust: Funded with the beneficiary’s own assets, often from a personal injury settlement or inheritance.
- Third-Party Special Needs Trust: Funded with assets from someone other than the beneficiary, such as parents, guardians, or other family members.
- Pooled Trust: Managed by nonprofit organizations that pool the resources of many beneficiaries for investment purposes while maintaining individual accounts for each beneficiary.
Conclusion
Establishing a Special Needs Trust in Maryland is a critical component of a comprehensive estate plan for families with a special needs beneficiary. It protects eligibility for government benefits, provides asset protection, offers flexibility and control, ensures professional management, and enhances the beneficiary’s quality of life. By setting up a Special Needs Trust, you can secure your loved one’s financial future and ensure their needs are met according to your wishes.