Special Needs Trusts

Maryland and Washington DC Estate Planning Attorney Helps You Leave a Legacy of Love

Picture of a happy familyIf you have a family member with special needs, or one who requires government assistance to live, a special needs trust may be what you need. A special needs trust is a type of trust you can create that will provide for your family member without endangering their eligibility for government assistance. Trust attorney Michelle Lanchester can help you with setting up a trust and help you ensure that your family member benefits from your estate.

Why a Special Needs Trust Might Be Right for You

Leaving part of your estate to a family member with special needs is a wonderful way to ensure a stable future after you pass on. A special needs trust is intended for someone with a mental or physical disability, or a chronic illness, to receive benefits from a Trust that can contain an unlimited amount of assets. Some advantages of a special needs trust are:

  • Maintaining eligibility for government assistance. In Maryland and DC, you will lose government benefits if you have over $2000 in assets. A special needs trust allows your loved one to receive funds from your estate without losing government benefits.
  • Paying for miscellaneous expenses. Social Security pays for housing and food, Medicaid pays for healthcare, but what about entertainment, travel, furniture, or out-of-pocket expenses? Funds from a special needs trust can cover these expenses.
  • Protection from creditors. Because the beneficiary does not directly own the trust, the beneficiary’s creditors have no legal claim to any funds or services from the trust.
  • You do not necessarily need to fund the trust in your lifetime. While some prefer to fund it while alive, it is also possible to fund the trust with a life insurance payout.

Important Guidelines for Special Needs Trusts

A special needs trust carries certain disadvantages, including:

  • The funds cannot be directly distributed to the beneficiary. A trustee must be appointed to pay third parties on the beneficiary’s behalf
  • Cash payments to the beneficiary are taxable income. Furthermore, this income will count, dollar for dollar, against the government benefits the beneficiary will receive. Some individuals address this by using the funds to purchase goods and services on the beneficiary’s behalf.
  • Funds cannot cover what Social Security and Medicaid provide. For example, if Social Security pays for rent, funds from the trust cannot cover that expense.
  • It is essential to choose a trustworthy trustee. It is possible to sue a trustee for neglecting their duties, but the process may be far beyond the beneficiary’s abilities.

Creating a Special Needs Trust

People typically establish special needs trusts as “stand-alone” trusts, but you can also include them in wills. The best way to create a special needs trust is to speak with an experienced estate planning attorney who can discuss the pros and cons of special needs trusts in more detail and advise you about selecting a trustee and funding the trust.

Leave a Legacy of Love – Contact Our Maryland and Washington DC Estate Planning Attorney

If you are considering a special needs trust for your loved one, contact our Maryland and Washington DC estate planning lawyer. Attorney Lanchester has decades of experience helping individuals and families plan for their financial futures. Call today for a free consultation.

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