What You Need to Know About Special-Needs Trust Planning

Special-needs trusts, also known as “supplemental-needs” or “quality-of-life trusts,” help to supplement the care and benefits provided to an individual with disabilities. These trusts can provide an increase in the quality of life an individual with disabilities experiences; however, it is important to have an understanding of these trusts before deciding whether it is the appropriate choice for your circumstances. Here, estate planning attorney James A. List, explains what you should know about special-needs trust planning.

There are Several Kinds of Special Needs Trusts


  • Self-Settled Trusts


Self-settled trusts are used when an individual who is injured or disabled qualifies for Medicaid benefits to pay for their care; the trust is created using the individual’s own personal assets. These assets often come from a personal injury or malpractice award or settlement. After the beneficiary of the trust dies, the remaining funds in their trust must be paid to the government agency that was providing benefits to the individual with disabilities.


  • Third-Party Special-Needs Trusts


A third-party special-needs trust is one that is funded by a third-party—often the parents, grandparents or guardian of the individual with disabilities—and can be created through a will, a living trust or established by a grantor during their lifetime. Unlike a self-settled trust, the assets in a third-party trust do not need to be paid to any government agency upon the beneficiary’s death. Instead, they may be distributed as the trust agreement specifies.


  • Pooled Trusts


Pooled trusts are special-needs trusts managed by a non-profit organization that pool and invest funds from a multitude of sources. Each beneficiary has a separate account, and the way the money in the account is spent is not overseen by the organization—instead, a trustee is chosen. These trusts can be beneficial for individuals who do not have an extensive amount of assets.

A Trustee Must Be Designated, and Special-Needs Trusts Can Be Used for a Variety of Goods and Services

The assets in a special-needs trust cannot be given directly to the individual with disabilities, as this would affect their ability to receive federal benefits. Instead, as mentioned previously, a trustee is designated to oversee the trust and distribute funds as per the trust agreement. The funds can be used to procure many different kinds of goods and services for the beneficiary—this often includes personal care attendants, physical therapy services, education, service animals, recreation, vacations, out-of-pocket medical or dental expenses and more.

Retaining an Estate Planning Attorney Can Help Ensure the Trust You Choose Serves Your Unique Needs

A special-needs trust can go a long way in providing relief and peace-of-mind for those with disabilities. Before deciding on a special-needs trust, however, be sure to retain the services of an attorney who has experience with trust and estate planning, specifically for individuals with unique needs. The Law Offices of James A. List is dedicated to helping individuals find the right estate planning tools for their personal needs and desires—if you or a loved one are interested in establishing a special-needs trust, or have any questions regarding estate planning, contact The Law Offices of James A. List today!

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Hunt Valley, Maryland 21031

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