First Maryland Disability Trust and PLAN of Maryland-D.C., Inc. are proud to announce a new strategic affiliation that will expand access to high-quality trust resources and case management for individuals with special needs and their families throughout Maryland. Learn more.
Please note: Our office will close at 2:00 pm on Friday, May 24 and reopen at 8:00 am Tuesday, May 28.

Getting Started



Setting Up A Special Needs Trust

As a special needs trust administrator, First Maryland Disability Trust accepts new beneficiaries through referrals from attorneys, financial planners, public agencies, and the Maryland court system. New clients can also self-refer.

First Maryland Disability Trust (FMDT) does not provide legal services. We advise all our clients (whether you are the individual seeking a trust, family, or friend) to meet first with a special needs attorney, and can refer you to an attorney from our network of trusted, experienced partners.

For our clients who need case management, legal advice, or financial planning services, we can recommend an organization or individual from our many reputable resources.


special needs attorneys

Partners

Attorneys

In addition to referring potential clients to attorneys, FMDT is available to assist attorneys in all practice areas. For example, we often speak with litigation attorneys regarding their clients who may receive benefits or assist in determining benefits. We take in funds from structured settlements or direct lump-sum settlements. These types of funds are either a first-party stand-alone [(d)(4)(A)] or a pooled asset trust [(d)(4)(C)].

For Estate, Trust, or Elder Law Attorneys

A third-party stand-alone special needs trust is a valuable planning tool. However, if a client has limited funds to provide for the future of an individual with disabilities, a third-party pooled special needs trust is an effective option.

We also act as a successor trustee for revocable living trusts and work with estate planning attorneys serving as initial or successor trustees for testamentary and irrevocable trusts.

The first-party pooled trust is an excellent tool for unplanned funds like inheritance or retroactive SSA awards, or over-scale guardianship funds

See our partner brochure for more information about setting up a special needs trust.


special needs financial planner

Financial Planners & Investment Managers

We often refer clients to special needs financial planners from our network of knowledgeable partners. Financial planners play an integral role in ensuring trust assets are available to meet disabled individuals’ needs, both now and in the future. 

FMDT’s team works with financial planners to develop and manage trust assets according to the individual’s financial circumstances while assuring their quality of life. For financial planners in need of trustee services for their clients, FMDT provides trust management services while the financial planner manages the funds. 

Whatever your situation, we are happy to meet with clients, attorneys, and financial planners to create a plan that provides for the current and future needs of individuals with disabilities.


Glossary of Terms

Advocacy Services / Disability Advocacy

Disability advocates or advocacy service providers help individuals with disabilities and their families understand and uphold their rights. This may involve providing information on the rights of people with special needs, assisting them with making claims or filing complaints, and acting as a representative with schools, government agencies, or other organizations.

 

Beneficiary

A beneficiary is a person or persons who has the right to receive distributions from the trust.

 

Case Management

Special needs case managers play an essential role in helping to navigate the unique challenges faced by people with disabilities and their families. Case management involves five areas of expertise: assessment; planning; treatment; monitoring; and advocacy for the individual or family by connecting them with outside agencies and organizations.

 

Caregiver

There are several types of caregivers

The most common type is family caregivers. However, there are also professional, independent, private, informal, and volunteer caregivers. 

A caregiver can be paid for their time assisting and caring for a person with disabilities. However, the amount of (and eligibility for) compensation varies.

 

Disability Qualifications

To be qualified as “disabled” by the Social Security Administration, an individual must be diagnosed with a medical or mental health condition that has lasted, or is expected to last, for 12 months or will result in death. In addition, the individual must also be unable to work either in their previous career or any other type of job.

Learn more about the SSA’s disability qualifications here.

 

Elder Law Attorney

An elder law attorney is a lawyer whose practice focuses on the needs of older adults and persons with disabilities. They advocate for senior citizens and persons with disabilities by providing services related to estate planning, trusts, healthcare, long-term financial planning, guardianship, retirement, Medicare, Medicaid, social security, and more. They are considered specialists because of their unique understanding of the needs of older adults and persons with disabilities.

 

Estate and Trust Attorney

Estate attorneys specialize in matters related to passing on assets after death and planning for circumstances in which individuals can no longer care for themselves. They are proficient in wills, trusts, and probate matters. Some also have additional expertise in working with individuals with disabilities.

 

Financial Planning

Broadly, financial planning is an evaluation and plan that outlines a person’s financial situation and long-term monetary goals. Financial planning plays a vital role for those with special needs. Careful financial planning ensures that individuals with disabilities have enough resources to cover their needs and expenses, which in many cases are greater than those without disabilities.

FMDT works with several experienced financial professionals that can assist with financial planning.

 

First-Party Trusts

A first-party trust is funded with an individual’s own assets for their personal use and benefit.

 

First-Party Special Needs Trust (SNT)

First-party special needs trusts benefit individuals with special needs who already qualify for, or may one day require, public benefits. The beneficiary funds a first-party SNT with their personal assets. The funds supplement expenses not covered by Social Security Income (SSI), Medicare, or Medicaid.

This type of trust is commonly used when an individual has significant personal assets or expects to receive an inheritance or settlement. In these situations, a first-party trust allows them to access their money while preserving eligibility for government benefits.

The trust must be “irrevocable” or unchangeable. 

Learn more about first-party special needs trusts.

 

First-Party Stand-Alone Trust (SNT), also known as a d(4)(A)

A first-party stand-alone trust is a form of trust established when a person with disabilities has sufficient funds and hires an advocate to establish a special needs trust specifically for them. The beneficiary must be under 65 when the trust is created. When the beneficiary passes away, a repayment requirement reimburses Medicaid for medical assistance paid on the beneficiary’s behalf.

 

First-Party Pooled Special Needs Trust, also known as a d(4)(C )

A first-party pooled special needs trust is established through a joinder agreement and funded with the beneficiary’s assets and “pooled” with others’ funds for investment purposes. A first-party pooled trust maintains separate accounts for each individual in the pool, and money in the individual account is used only for expenses of the individual with disabilities.

The beneficiary may be over 65 when the trust is established.  Although this is subject to a Medicaid payback after the beneficiary’s death, the trust’s assets may be gifted to FMDT for charitable purposes instead of state repayment. 

Learn more about First Maryland Disability Trust’s first-party pooled special needs trusts.

 

Guardianship

A guardian can be an individual or an institution (such as FMDT) that is court-appointed to care for a person known as a “ward.” A guardian is responsible for exercising the ward’s legal rights, but guardians have fewer powers (without a court order) than trusts.

A guardian of the property is required to gather the assets, prepare an inventory of the ward’s property and assets, prepare an annual accounting, and file with the court. 

A guardian of the person has the authority to make medical, mental health, and personal care decisions on behalf of the ward. The court must approve plans for the ward’s care. 

One guardian may be appointed as both guardian of person and property.

 

Individuals with Disabilities / Individual with a Disability

An individual with a disability is defined by the Americans with Disabilities Act (ADA) as someone who has a physical or mental impairment that substantially limits one or more major activities.

While the ADA doesn’t specify all the disabilities that qualify, the Social Security Administration (SSA) is more specific. To meet SSA requirements, an individual must be diagnosed with a medical or mental health condition that has lasted, or is expected to last, at least 12 months or result in death. In addition, the individual must also be unable to work either in their previous career or any other type of job.

Learn more about the SSA’s disability qualifications here.

 

Inheritance

Inheritance occurs when property is passed down to a person. An inheritance can be any type of property, including money, investments, household goods, jewelry, or real estate. 

The laws and regulations regarding how an inheritance impacts an individual can vary. You should consult with an attorney or tax advisor for information specific to your personal circumstances.

 

Last Will and Testament

A last will and testament is a legal document that specifies a deceased person’s wishes pertaining to distributing their property after death. It applies to both personal possessions and real property. The individual who receives assets from the will is known as the beneficiary or legatee. Wills also specify an administrator, known as a personal representative or executor, who is responsible for administering the deceased person’s estate or property. 

Last will and testaments vary greatly, but their purpose is the same: to ensure that the person’s affairs are handled per their wishes after they pass. Many wills incorporate a testamentary trust established only after the testator, the person making the will, has died. 

Learn more about testamentary trusts.

 

Joinder Agreement

In the context of pooled special needs trusts, a joinder agreement or joinder is a document that legally enrolls the individual with special needs into a pooled trust. Both first and third-party pooled trusts require joinder agreements.

 

Maryland Trust Act (MTA)

The Maryland legislature enacted the Maryland Trust Act (MTA) in 2014. It became effective in January 2015. The MTA governs all items related to trusts, including creation, modification, and termination of the trust; the trustee’s role; and the trustee’s duties and powers.

 

Means-Test / Means-Tested

A means-test is how the government determines an individual’s eligibility for public benefits.

 

Medicaid and Medical Assistance 

Medicaid is a means-tested U.S. federal and state program that provides medical care and health insurance for those who require financial assistance.

In Maryland, a person on Supplemental Security Income automatically qualifies for Medicaid, and there are a variety of programs that provide medical assistance. These include the following:

  • Maryland Children’s Health Insurance Program
  • Medicaid
  • Long-Term Care Medical Assistance
  • Medicaid Waiver Programs

These programs provide access to medical care and coverage for those unable to qualify for other programs. 

Learn more about Maryland’s Medical Assistance programs.

Individuals with disabilities can preserve access to Medicaid and other benefits by participating in a special needs trust, which lowers their asset level.

 

Over-Scale Guardianship Funds

A guardian of the property manages funds for a person with a disability.  If the individual with a disability is receiving Supplemental Security Income and Medicaid, they have a Maryland resource limitation of $2,500 for any one month. However, sometimes individuals receive lump sums of money that exceeds the $2,500 limit, which could cause them to lose eligibility for means-tested benefits. These are called over-scale funds.

 

Pooled Trust / Pooled Asset Trust (PSNT)

pooled special needs trust is established by a master trust agreement and a joinder agreement, and managed by a non-profit association. The PSNT may be funded either with resources of the individual with disabilities as a first-party PSNT or with resources from family or friends as a third-party PSNT. Although the trusts funds are combined with the assets of other individuals for investment management purposes, a separate sub-account is set up for each individual and used only for that individual.   

Learn more about pooled trusts.

 

Public Benefits

Public benefits are any form of assistance from either the federal or state government and take many forms, including temporary assistance, Social Security, education financial aid, and tax credits. 

For individuals with disabilities, the most pertinent public benefits provide access to food, housing, medical care, and transportation. A disability advocate, case manager, or attorney can help those who need public services understand which benefits they qualify for.

 

Retroactive SSA Awards

A retroactive SSA (Social Security Administration) award is a social security payment made to a disability applicant for the time between the date of application and the date their application was approved (date awarded benefits).

 

Social Security Disability Insurance (SSDI)

Social Security Disability Insurance (SSDI) are payments made to individuals with disabilities who are “insured” by worker contribution to the Social Security Trust Fund. SSDI is paid to individuals with a disability that precludes them from continuing to work. The medical requirements for SSDI are the same as those for SSI, though eligibility differs.

Contributions are based on the individual’s earnings or those of their spouse or parents. This means that the beneficiary, or their spouse or parent(s), must have worked long enough and recently enough to draw on their contributions to the Social Security system.

Learn more about Social Security Disability Insurance.

 

Supplemental Security Income (SSI) 

Supplemental Security Income (SSI) is a Social Security Administration (SSA) program that makes cash payments to individuals with disabilities. Though administered by the SSA, SSI funds come from tax revenues from the U.S. Treasury and not the Social Security Trust Fund. 

SSI is available to individuals who are over the age of 65, blind, or disabled. To qualify for SSI, you must:

  • Have limited income and resources
  • Be a U.S. Citizen, national or resident alien
  • Reside in one of the 50 states or District of Columbia (except for children of military parents stationed abroad)

Other factors affecting eligibility for SSI include monthly income, bank balance, and marital status. Learn more about Supplemental Security Income.

 

Special Needs Planning Attorney

A special needs planning attorney is a lawyer that specializes in representing and advocating for individuals with disabilities. Special needs planning attorneys can help clients understand their eligibility for federal and state benefits, create a special needs trust (SNT), and connect them with special needs service providers and community organizations. They are also usually familiar with estate planning and can help individuals and families plan for current and future needs. 

 

Special Needs Trust Allowable Expenses

A special needs trust is created specifically to cover the cost of goods and services not covered by other benefits. For example, allowable expenses covered by a special needs trust are medication, medical equipment, insurance premiums, and also expenses not related to healthcare. 

See a list of qualifying expenses here.

 

Supplemental Security Income Limits

There are income and asset limits that qualify an individual for Supplemental Security Income (SSI). Income limits vary by state and change annually.  Questions concerning your eligible benefits should be addressed to a benefits counselor or attorney.

 

Special Needs Trusts (SNT)

A special needs trust (SNT) is also called a supplemental needs trust. A SNT is a trust that allows individuals with disabilities to receive income without reducing eligibility for public benefits such as Supplemental Security Income (SSI) and Medicaid. 

SNTs are also called supplemental needs trusts because they supplement expenses not covered by other benefits. SNTs protect an individual’s assets and are frequently used to receive inheritances or personal injury settlements. 

Learn more about special needs trusts.

 

Special Needs Trust Administration / Trust Administration

Special Needs Trusts (SNT) can be administered by a family member, an attorney, or a corporate trustee like First Maryland Disability Trust, Inc. Special needs trust administration is complex since distributions to beneficiaries must comply with federal and state regulations for trusts.

 

Stand-Alone Trust

Supplemental Needs Trust Fund

Testamentary Special Needs Trust

A deceased individual’s last will and testament creates the special needs testamentary trust and specifies an individual with disabilities as the beneficiary.

Learn more about testamentary special needs trusts.

 

Third-Party Pooled Special Needs Trust / Third-Party Trust

A third-party pooled special needs trust is a supplemental needs trust created by family or friends of the individual with disabilities that “pools” funds with assets of other individuals for investment and management purposes. Though monies are combined for investment,  the pooled trust maintains individual accounts for each beneficiary, and those funds are used for their benefit only.

Learn more about third-party pooled special needs trusts.

 

Third-Party Stand-Alone Trust

A third-party stand-alone trust is a non-pooled trust, created by family and/or friends, through an attorney, generally for a single beneficiary.  Only those assets contributed by family and/or friends are managed in this trust. The trustee may be a family member, friend, attorney, bank, or corporate trustee such as First Maryland Disability Trust, Inc.

 

Trustee

A trustee is a person or organization who manages the money and assets in a trust. The trust appoints the trustee when it is created. A trustee is considered the legal owner of the trust’s assets and holds fiduciary responsibility for managing those assets according to the trust’s terms and the law.

Corporate Trustee

A corporate trustee is an organization that acts as the legal owner of a trust. For example, while First Maryland Disability Trust, Inc. is a non-profit organization, FMDT’s Board of Directors, by virtue of its appointed agent, is considered a corporate trustee.

Pooled Trustee

A pooled trustee is a trustee that administers and manages a pooled trust.

Testamentary Trustee

A testamentary trustee is a trustee that administers a testamentary trust.

 

Trust Management

Types Of Trusts

There are several types of special needs trusts. Trusts can be either first-party or third-party. These are: 

First-Party Special Needs Trusts
  • Payback Trust
  • Pooled Asset Trust (PSNT)
  • Medicare Set-Aside Trusts (MSA)
Third-Party Special Needs Trusts
  • Third-Party Pooled Trust
  • Testamentary Trust

Visit First Maryland Disability Trust’s “Who We Serve” page to understand all the different types of special needs trusts and how each works differently.

 

Unplanned Funds

Money or property that a person did not expect to receive is considered unplanned funds. These include unexpected inheritances or settlements. 

 

Waiver Programs

Waiver programs allow states to waive specific requirements to better meet the needs of individuals with disabilities.  

 


Frequently Asked Questions

What is a special needs trust?

A special needs trust, or supplemental needs trust, benefits individuals with disabilities while preserving access to needs-based public programs like Medicaid and SSI. These trusts are critical to ensuring the care and quality of life of individuals with disabilities. 

Learn more about special needs trusts.

 

What are special needs trust restrictions?

Special needs trust restrictions are based on the type of trust, public benefits received (if any), the disabled person’s assets and age. Any questions regarding SNT’s or the restrictions should be addressed with an attorney.

 

What types of special needs trusts are available?

There are several types of special needs trusts. Trusts can be either first-party or third-party. These include: 

First-Party Special Needs Trusts
  • Payback Trust
  • Pooled Asset Trust (PSNT)
  • Medicare Set-Aside Trusts (MSA)
Third-Party Special Needs Trusts
  • Third-Party Pooled Trust
  • Testamentary Trust

Visit First Maryland Disability Trust’s “Who We Serve” page to understand all the different types of special needs trusts and how each works differently.

 

What types of special needs trusts are available in Maryland?

There are several types of special needs trusts available in Maryland. First Maryland Disability Trust offers first-party and third-party special needs trusts, either stand-alone or pooled.

Visit First Maryland Disability Trust’s “Who We Serve” page to understand all the different types of special needs trusts and how each works differently.

 

What are special needs trust allowable expenses?

Special needs trust allowable expenditures are expenses reimbursed from a special needs trust fund. These include, but are not limited to:

  • Automobile/van services
  • Accounting services
  • Appliances
  • Bus/public transportation passes
  • Camera, film, recorder, tapes, film development
  • Club dues and memberships
    (e.g., health and book clubs, museums, etc.)
  • Clothing
  • Computer hardware, software, programs, accessories
  • Conferences and classes (academic or recreational), school supplies
  • Dental work, not covered by private or public health insurance
  • Dry cleaning and laundry services
  • Elective surgery not covered by private or public health insurance
  • Fitness equipment, personal training
  • Flowers
  • Funeral expenses (if paid while the beneficiary is living)
  • Furniture and furnishings for beneficiary’s home
  • Gardening supplies and expenses
  • Gasoline and automobile maintenance
  • Haircuts/salon services
  • Home alarm and monitoring systems
  • Home improvements and repairs,
    including modifications for accessibility
  • House cleaning
  • Insurance
  • Landscaping and lawn services
  • Legal services
  • Medical services and medications not covered by private or public health insurance
  • Motorized scooters
  • Musical instruments, lessons, and music
  • Non-food grocery items, personal care items
  • Pets and pet supplies, obedience training classes for pets
  • Snow removal
  • Sporting goods and equipment, uniforms, team photos
  • Stationery, stamps
  • Storage units
  • Telephone service and equipment
  • Television and cable service
  • Tickets for travel, sporting, theater, and other events
  • Vacation travel and accommodations

What is the difference between a stand-alone trust and a pooled asset trust?

A stand-alone trust is an account whose funds are separate from all other accounts. A pooled asset trust is combined with other funds for investment and management purposes. An individual account is maintained for the beneficiary in both trust types, and the funds in that account are used only by the beneficiary.

 

What is a pooled asset trust?

A pooled asset trust allows several individuals to combine their assets for investment and financial management purposes. While funds are invested together, a separate account is maintained for each trust beneficiary. The individual account is used only for that individual’s expenses. 

Learn more about pooled trusts.

 

What is a testamentary trust?

A deceased individual’s last will and testament creates the special needs testamentary trust and specifies an individual with disabilities as the beneficiary.

The parents of an individual with disabilities commonly create testamentary trusts to ensure that their loved one is financially provided for after their passing.

Learn more about testamentary special needs trusts.

 

Does inheritance affect Medicaid benefits?

Inheritance and Medicaid Eligibility

Whether or not an inheritance will affect Medicaid eligibility depends upon how the estate is distributed. For example, if an inheritance is directed to a special needs trust, the person receiving the benefit does not legally own the funds. Therefore, money placed in the trust through inheritance will not affect their eligibility for public services.

However, if an individual with disabilities who would otherwise be eligible for Medicaid or other public benefits received the funds directly, their eligibility for benefits may be affected.

 

How do you close out a special needs trust?

A special needs trust is irrevocable. That means that the trust can only be closed when the beneficiary passes away or all the funds in the trust have been spent. 

 

What is the difference between a first-party trust and a third-party trust?

First-Party vs. Third-Party Trusts

The difference between a first-party trust and a third-party trust is the source of funding. First-party trusts are funded with the beneficiary’s assets. A third-party trust is funded by assets belonging to anyone other than the beneficiary.

Learn more about first and third-party disability trusts.

 

Who is eligible for a special needs trust?

Special needs trusts are for people with disabilities. The type of trust will depend on the age of the person, their expected life span, the source of funding, and other factors. A special needs planning attorney or estate planning attorney can help you determine the appropriate type of trust for your personal circumstances.

 

What is Medicare set aside?

A Medicare set aside (MSA) trust is funded by a worker’s compensation claim or personal injury action. In this trust structure, funds from a settlement or judgment are set apart to pay for medical expenses resulting from that specific incident.

 

What is a third-party special needs trust?

How do you set up a trust or special needs trust (SNT) in Maryland?

How to Set Up a Trust In Maryland

Creating a trust in Maryland is not unique compared to other localities. You will need the expertise of an attorney, as well as a financial planner to determine the financial needs of the person with a disability to establish a trust or special needs trust

The basic steps to set up a trust are:

1. Choose what type of trust to create, either first or third-party.
2. Decide what assets or property will fund the trust.
3. Choose a trustee to manage the trust. First Maryland Disability Trust acts as the trustee for the trust it manages.
4. Define the beneficiary. In the case of special needs trusts, this is the individual with a disability.
5. Work with an attorney to create and execute the trust document, either a stand-alone trust or pooled trust.
6. Transfer assets to the trust.

The steps to create a special needs trust are:

1. Consult with an attorney to determine what type of trust you will create. Learn more about the kinds of trusts here.
2. Decide what assets will fund the trust and the amount needed to provide for the beneficiary financially.
3. Choose a trustee to manage the trust. First Maryland Disability Trust acts as the trustee for the trust it manages.
4. Define the beneficiary, in this case, the individual with a disability.
5. Work with your attorney to create the trust document. 
6. Sign the trust document in front of a notary public.
7. Transfer assets to the trust.

 

What is a disability trust fund?

A disability trust fund is another name for a special needs or supplemental needs trust.

See “Special Needs Trust (SNT)” or visit our “Who We Serve” page to learn more about disability trust funds. 

 

What is the difference between Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI)?

The Social Security Administration (SSA) provides both Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) to benefit individuals with disabilities. However, eligibility and the amount and type of benefits differ.

Social Security Disability Insurance (SSDI) are payments made to individuals with disabilities who are “insured” by worker contribution to the Social Security Trust Fund. SSDI is paid to individuals with a disability that precludes them from continuing to work. The medical requirements for SSDI are the same as those for SSI, though eligibility differs.

Learn more about Social Security Disability Insurance.

Supplemental Security Income (SSI) is a Social Security Administration program that makes cash payments to individuals with disabilities. SSI is available to individuals who are over the age of 65, blind, or disabled. To qualify for SSI, you must:

  • Have limited income and resources
  • Be a U.S. Citizen, national or resident alien
  • Reside in one of the 50 states or District of Columbia (except for children of military parents stationed abroad)

Other factors affecting eligibility for SSI include monthly income, bank balance, and marital status.

Learn more about Supplemental Security Income.

 

What are the supplemental security income (SSI) limits?

Supplemental Security Income (SSI) income limits vary by state.

See “Supplemental Security Income Limits” for more information.

 

What are disability qualifications?

The Americans with Disabilities Act (ADA) defines a disability as a physical or mental impairment that substantially limits one or more significant activities. 

To qualify as “disabled” by the Social Security Administration (SSA), an individual must be diagnosed with a medical condition that has lasted, or is expected to last, for 12 months or result in death. In addition, the individual must also be unable to work either in their previous career or any other type of job.

Learn more about the SSA’s disability qualifications here or see “individual with a disability” for more information. 

 

How much does it cost to set up a special needs disability trust?

Costs involved in setting up a special needs trust vary depending on individual circumstances, and may include:

 

First Maryland Disability Trust

1400 Front Avenue, Suite 303

Lutherville, MD 21093

Phone: 410-296-4408

Fax: 410-296-1290

Email: [email protected]