30 West Patrick Street Ste. 100 Frederick, Maryland 21701

Special Needs Trust

parents smiling and embracing their son with down syndrome

What is a Special Needs Trust?

A special needs trust allows a person with disabilities to receive supplemental funds for living expenses without disqualifying them from governmental benefits programs, such as Supplemental Security Income (SSI) and Medicaid. A special needs trust also conserves assets to provide a “cushion” in the event that public benefits are ever reduced or eliminated in the future.

The trustee of a special needs trust must be extremely careful to use the funds in the trust so that the government benefits for the beneficiary are not affected.

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Who Should Use a Special Needs Trust?


Any of the millions of families in the United States that have at least one family member with special needs should consider a special needs trust. Families utilizing special needs trusts can enjoy peace of mind knowing their loved one is supported when they are no longer able to care for them.

Self-Settled Trust

This trust is funded with the disabled person’s own assets. When the disabled person dies, any remaining funds in the Self-Settled Trust must be used to repay the State for any Medicaid benefits the person received during his or her lifetime. In Maryland, this type of trust is referred to as a “d4A” Trust. The advantage of this type of trust is that it allows the trustee to conserve the assets of the beneficiary while at the same time qualifying the beneficiary for all applicable public benefits. The disadvantage is that upon the beneficiary’s death, any remaining funds will need to be used to pay the Medicaid lien which can conflict with the family’s wishes that the remaining money benefit family members, charities, or other heirs.

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older man pushing his wife in a wheelchair

Third-Party Trust

This trust is funded with the assets of an individual other than the disabled person, such as a parent, and is created through a will, revocable living trust, or a stand-alone trust. The benefit of this type of special needs trust is that the remaining funds following the death of the disabled person, do not pass to the state but instead are distributed to the remainder beneficiaries chosen by the person who created the trust. The disadvantage of the third party trust is that it cannot be created with any property that belonged to the disabled beneficiary.