Third-Party Special Needs Trust Planning for Your Loved One's Future
Special Needs Trusts in Maryland
If you have a child, grandchild, or other loved one with a disability, you may be wondering how to leave them an inheritance without unintentionally affecting the public benefits they receive or may need in the future.
Leaving money or property directly to someone who receives Supplemental Security Income (SSI) or certain Medicaid benefits can create eligibility concerns. A third-party Special Needs Trust may provide a way to plan that inheritance while taking those benefit rules into account.
At the Law Office of Dawn Trainor-Fogleman LLC, Dawn routinely helps Maryland families with third-party Special Needs Trusts. She takes the time to understand your family's circumstances, explain your options in plain English, and help you determine how this type of trust may fit into your estate plan.
As a mobile estate-planning attorney, Dawn meets with clients in their homes at mutually convenient times, making it easier to discuss personal concerns and review existing documents together.
MOBILE ESTATE PLANNING ATTORNEY
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30+ YEARS OF LEGAL EXPERIENCE
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20+ YEARS FOCUSED ON ESTATE PLANNING
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PERSONALIZED THIRD-PARTY SPECIAL NEEDS TRUST PLANNING
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MOBILE ESTATE PLANNING ATTORNEY • 30+ YEARS OF LEGAL EXPERIENCE • 20+ YEARS FOCUSED ON ESTATE PLANNING • PERSONALIZED THIRD-PARTY SPECIAL NEEDS TRUST PLANNING •
AFTER SOMEONE DIES
What Is a Third-Party Special Needs Trust?
A third-party Special Needs Trust allows a parent, grandparent, or another person to provide money or property for the benefit of a loved one with a disability.
Instead of leaving assets directly to the beneficiary, the assets are held in a trust and managed by a trustee according to the trust's terms.
When properly structured, a third-party Special Needs Trust may allow those assets to provide additional support without being counted as available resources under certain means-tested public-benefit rules.
This can be particularly important when planning for someone who receives or may eventually need SSI or Medicaid.
However, creating a Special Needs Trust does not automatically guarantee continued eligibility for benefits. The trust's provisions, the source of its funding, and how distributions are made can all affect the outcome.
The purpose is to provide for your loved one's future in a way that reflects your wishes while accounting for their individual circumstances.
PLANNING FOR A LOVED ONE'S FINANCIAL FUTURE
When Should Your Family Consider a Special Needs Trust?
You do not have to wait until an inheritance is about to be distributed to begin planning.
Families often start thinking about Special Needs Trusts when preparing a Will, updating an existing estate plan, or considering how to provide for a loved one whose financial or support needs may be different from those of other beneficiaries.
How Can I Leave an Inheritance to a Child With a Disability?
You want to know your child will have financial support after you are gone. But if your child receives means-tested benefits, leaving money or property directly to them may affect eligibility.
A third-party Special Needs Trust may allow you to leave assets for your child's benefit while naming someone to manage those assets according to the trust's instructions.
It also gives you an opportunity to think about who should serve as trustee and how the assets should be managed over time.
Can I Establish a Special Needs Trust for an Adult Child?
Yes. Third-party Special Needs Trust planning is not limited to minor children.
You may be planning for an adult child, sibling, or another family member with a disability who receives public benefits or may need financial support in the future.
The appropriate arrangement depends on the person's circumstances, the assets you intend to leave, and your estate-planning goals.
Can Grandparents Leave Money to a Grandchild With Special Needs?
Yes. Grandparents and other relatives may establish or fund a third-party Special Needs Trust for a loved one with a disability.
Before naming that person as a direct beneficiary of a Will, trust, or financial account, it is important to consider how the inheritance would be received.
If several family members intend to leave assets for the same person, coordinating those plans can help avoid conflicting instructions or unintended distributions.
What If I Already Have a Will or Living Trust?
You may not need to start over.
If your existing estate-planning documents leave assets directly to someone whose circumstances have changed, it may be appropriate to review those instructions.
Dawn can help you evaluate your current Will or trust and consider whether changes or a third-party Special Needs Trust would better reflect your family's needs.
How Does a Third-Party Special Needs Trust Work?
A third-party Special Needs Trust generally involves three important roles.
The Person Providing the Assets
A parent, grandparent, or another person establishes or funds the trust using assets that belong to them, rather than assets belonging to the beneficiary.
The Beneficiary
The beneficiary is the loved one with a disability whom the trust is intended to support.
The Trustee
The trustee is the person or organization responsible for managing the trust assets, following the trust's instructions, and making appropriate distributions.
A third-party Special Needs Trust may be established during the lifetime of the person creating it or through estate-planning documents that establish the trust after death.
The appropriate arrangement depends on when and how you want assets to reach the trust, who will manage them, and what you want the plan to accomplish.
ALIGNING YOUR ESTATE PLANNING DOCUMENTS
Coordinating a Special Needs Trust With Your Maryland Estate Plan
Creating a Special Needs Trust is only one part of the planning process. You also need to make sure your other estate-planning documents direct assets where you intend them to go.
How Does a Special Needs Trust Work With Your Will?
Your Will may direct an inheritance to an appropriately structured Special Needs Trust rather than leaving assets directly to a beneficiary.
Depending on your circumstances, the trust may be established through your Will or created separately.
Dawn can help you consider how the documents should work together.
Learn more about Wills in Maryland .
Can You Add Special Needs Planning to an Existing Living Trust?
If you already have a Revocable Living Trust, it is important to review what the document says about distributing assets after your death.
For example, the trust may currently provide for an outright inheritance when a different arrangement would better reflect a beneficiary's needs.
Dawn can review your existing estate-planning documents and help you consider whether changes are appropriate.
For a broader explanation of trust planning, visit our Trusts page .
Why Should You Review Beneficiary Designations?
Life insurance policies, retirement accounts, and certain other financial assets may pass according to beneficiary designations rather than the instructions in your Will.
If you are planning an inheritance for someone with a disability, those designations should be reviewed carefully.
The type of account, the intended trust arrangement, and applicable tax and distribution rules can affect how the assets should be handled.
The goal is to make sure the different parts of your estate plan work together rather than unintentionally creating conflicting results.
TRUSTEE SELECTION & BENEFIT CONSIDERATIONS
Choosing a Trustee for a Special Needs Trust
Choosing who will manage the trust is one of the most important decisions in Special Needs Trust planning.
The trustee may be responsible for managing assets, maintaining records, paying expenses, and making distributions according to the trust's terms.
Should You Name a Family Member or a Professional Trustee?
A family member may know the beneficiary well and understand their day-to-day needs.
However, serving as trustee also involves financial, legal, and administrative responsibilities.
Depending on the circumstances, a professional or institutional trustee may be worth considering.
Think about whether the person you select has the time, judgment, and willingness to manage the trust responsibly. It is also important to consider naming a successor trustee in case your original choice can no longer serve.
Can Special Needs Trust Distributions Affect SSI or Medicaid Benefits?
Yes. Even when a Special Needs Trust is structured so its assets are not counted as available resources for SSI, certain payments from the trust may affect the beneficiary's benefits.
Under current SSI rules, cash paid directly to the beneficiary generally counts as income. Payments for shelter may also reduce SSI payments, while many other expenses paid directly to third parties do not.
SSI and Medicaid have different requirements, so the treatment of trust assets and distributions must be considered under the applicable program rules.
DIFFERENT CIRCUMSTANCES, DIFFERENT APPROACHES
Understanding the Different Types of Special Needs Trusts
The right type of Special Needs Trust depends in part on who owns the assets intended for the trust.
Dawn routinely assists families with third-party Special Needs Trusts, which are funded with assets belonging to someone other than the beneficiary.
First-party Special Needs Trusts and pooled Special Needs Trusts involve different requirements. Dawn refers these matters to trusted colleagues who specialize in those arrangements.
Third-Party Special Needs Trusts
A third-party Special Needs Trust is funded with assets belonging to someone other than the beneficiary, such as a parent or grandparent.
Families may use this type of trust when planning an inheritance for a loved one with a disability.
Dawn routinely assists clients with third-party Special Needs Trusts and helps coordinate that planning with their Wills and other estate-planning documents.
First-Party Special Needs Trusts
A first-party Special Needs Trust involves assets that already belong to the person with a disability, such as certain inheritances or settlement proceeds.
These trusts have specialized legal requirements and may involve Medicaid repayment provisions.
Dawn refers first-party Special Needs Trust matters to trusted colleagues who specialize in these arrangements.
Pooled Special Needs Trusts
A pooled Special Needs Trust is administered by a nonprofit organization that maintains individual beneficiary accounts within a pooled arrangement.
The funding, administration, and applicable legal requirements depend on the particular arrangement.
Dawn refers pooled Special Needs Trust matters to trusted colleagues who specialize in this type of planning.
Families researching Special Needs Trusts may also hear about Maryland ABLE accounts.
An ABLE account is a tax-advantaged savings account for eligible individuals with disabilities. Funds may be used for qualified disability-related expenses, subject to the program's rules.
A third-party Special Needs Trust and an ABLE account serve different purposes.
A Special Needs Trust holds assets under a legal trust arrangement managed by a trustee. An ABLE account operates under a separate savings program with its own eligibility, contribution, and distribution requirements.
Depending on the circumstances, these tools may complement each other.
For current eligibility and program information, visit the Maryland ABLE program.
Special Needs Trusts and Maryland ABLE Accounts
Personalized Third-Party Special Needs Trust Planning With Dawn Trainor-Fogleman
Estate planning is personal. When you are making decisions about a loved one with a disability, you may have questions about your family's future, your financial circumstances, and whether your existing documents are enough.
Dawn understands that getting started can be difficult, especially when you are unsure which documents you need or what information to gather.
You do not need to have every decision made before contacting her.
The first step is a conversation about your family, your concerns, and what you want your estate plan to accomplish.
More Than 30 Years of Legal Experience
Dawn has practiced law for more than 30 years and has focused on estate planning for over 20 years.
She routinely assists clients with third-party Special Needs Trusts and helps families understand how those trusts fit into their larger estate plans.
Dawn does not believe every family needs the same documents.
For some clients, a traditional Will may be appropriate. Others may benefit from a trust or a combination of estate-planning tools.
Her goal is to understand your circumstances and help you choose a plan that makes sense for your family.
In-Home Estate Planning Appointments That Make the Process Easier
Dawn is a mobile estate-planning attorney who meets with clients in their homes at mutually convenient times.
Estate planning often involves personal family and financial information. Meeting at home provides a familiar setting to discuss those matters.
It also allows you to have existing Wills, trusts, financial information, and other important documents nearby when questions arise.
Dawn's practice is based in Damascus, Maryland. She offers mobile and in-home estate-planning appointments throughout much of Central Maryland, including Gaithersburg, Frederick, Rockville, Columbia, and surrounding communities. She also serves clients in Northwest Washington, D.C.
If you are unsure whether Dawn travels to your community, contact her office to ask about appointment availability.
Clear Guidance and Thoughtful Attention to Detail
Dawn believes clients should understand the estate-planning documents they sign.
She takes the time to explain the options, answer questions, and discuss how the documents are intended to work together.
Her approach emphasizes personalized attention, clear explanations, and careful preparation of documents that reflect the client's circumstances.
Guidance That Doesn't End When Your Documents Are Signed
Family circumstances, finances, and planning priorities can change.
Dawn values the ongoing relationships she develops with clients and encourages them to reach out when questions arise or their estate plans may need to be reviewed.
When a matter requires specialized legal assistance outside her practice, she can connect clients with trusted colleagues.
Let's Talk About Your Family's Estate Planning Needs
Discuss your questions, concerns, and planning priorities with Dawn.
ANSWERS TO COMMON ESTATE PLANNING QUESTIONS
Frequently Asked Questions About Special Needs Trusts in Maryland
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A properly structured Special Needs Trust may help provide financial support without its assets being counted as available resources under certain means-tested public-benefit rules.
However, the type of trust, its provisions, and how distributions are made all matter. Continued benefit eligibility is not guaranteed.
Dawn handles third-party Special Needs Trust planning and refers specialized Medicaid planning matters to attorneys who focus on those issues.
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Yes. A third-party Special Needs Trust may be appropriate for an adult child with a disability, not just a minor child.
The decision depends on the beneficiary's circumstances, the assets involved, and your estate-planning goals.
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Yes. A Special Needs Trust may be established through a Will, or a Will may direct assets to a separately established trust.
The appropriate structure depends on your estate plan and how you intend to provide for the beneficiary.
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A properly structured third-party Special Needs Trust funded entirely with third-party assets generally is not subject to the federal Medicaid payback requirement that applies to certain first-party Special Needs Trusts.
The trust's terms and applicable law determine how remaining assets are handled.
This distinction is one reason it is important to identify the source of the trust's funding and prepare the documents appropriately.
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If the assets already belong to the person with a disability, first-party Special Needs Trust planning or another specialized arrangement may be relevant.
Dawn refers first-party Special Needs Trust matters to trusted colleagues who specialize in that work.
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Possibly. Depending on your existing documents and circumstances, a Will or trust may be updated to include appropriate provisions.
Dawn can review your current estate-planning documents and help you consider whether third-party Special Needs Trust planning fits your family's needs.
START WITH YOUR QUESTIONS
You do not need to know exactly which estate-planning documents you need before speaking with an attorney.
If you are planning an inheritance for a child, grandchild, or another loved one with a disability, Dawn Trainor-Fogleman can help you discuss whether a third-party Special Needs Trust belongs in your estate plan.
With personalized attention, clear explanations, and convenient in-home appointments, Dawn helps Maryland families make informed decisions about their estate plans.