A special needs trust allows property to be held for a disabled person without making the person ineligible for public benefits such as Supplemental Security Income (SSI) and Medicaid. A person creating the trust, called a “grantor” or “settlor” establishes a contract stating how the money used to fund the trust can be used for the benefit of the disabled person. The person responsible for administering the trust is called the “trustee.”
In general a disabled person cannot have more than $2,000 in savings (excluding a car and a residence) to qualify for these benefits. A person who qualifies for SSI will also become eligible for Medicaid and food stamps and other community services.
Setting aside funds in a properly written special needs trust will enable the disabled person to have funds to supplement, but not supplant, these public benefits. These may include a private duty nurse, beauty supplies, electronics and travel expenses. A special needs trust may be superior to giving money to a relative to care for the disabled person because the money can get tangled with the relative’s personal problems such as divorce, bankruptcy, or death.
There are two types of special needs trusts, depending on whose money is used to fund the trust. A "self-settled" or "D-4-A" trust is a trust that is funded with the disabled person's own funds. A "third-party" trust is a trust funded with money form someone other than the disabled person. Self-settled trusts must meet various technical regulatory requirements in order to be valid and can be more restrictive than third party trusts.
The trustee of the special needs trust is responsible for managing and distributing funds for the benefit of the disabled person. It is therefore critical that the person or organization serving as trustee be trusted and responsible and sensitive to the needs of the disabled person.
Morris Klein is experienced in drafting special needs trusts and can advise on how best to proceed. He is a member of the Special Needs Alliance, a select group of attorneys who practice in this area. He is also a board member of the First Maryland Disability Trust, a not-for-profit organization managing funds for persons with disabilities.
_ Morris Klein serves clients in Bethesda, Maryland and throughout Montgomery and surrounding counties, as well as in Washington D.C. Call Morris Klein at 301-652-4462 or contact the law office online to schedule an appointment.