Special-Needs Trusts and Benefits Planning in Maryland: A Comprehensive Guide
In short: A special-needs trust (SNT) allows Maryland families to set aside money for a loved one with autism without losing eligibility for SSI, Medicaid, or other means-tested benefits. Benefits planning ensures that income and resources are managed to protect these crucial supports, including coverage for ABA therapy. Setting up an SNT with an experienced Maryland attorney is a key step in long-term financial care.
Key takeaways
- A special-needs trust can hold assets for a person with autism without disqualifying them from SSI or Medicaid in Maryland.
- Maryland's ABLE accounts offer a simpler alternative for smaller savings, but SNTs provide more flexibility and higher limits.
- Proper benefits planning is essential to avoid gaps in coverage - always consult a Maryland benefits planner or attorney.
- Many ABA therapy providers in Maryland accept Medicaid (Medical Assistance) and private insurance; the service ABA Care Near Me helps families find vetted BCBA-led options.
What Is a Special-Needs Trust and Why Is It Important for Autism Families?
A special-needs trust (SNT) is a legal tool that lets you set aside money or property for a person with a disability - like a child with autism - without that money counting as their own income or assets for means-tested benefits. In Maryland, these trusts can preserve eligibility for Supplemental Security Income (SSI), Medicaid (called Medical Assistance in Maryland), and other programs that often cover therapies like ABA (applied behavior analysis).
Without an SNT, a direct inheritance or gift could cause a person to lose benefits worth far more than the asset itself. For example, a $10,000 gift from a grandparent could jeopardize monthly SSI payments and Medicaid health coverage. An SNT allows those funds to be used for enrichment, education, or therapies not fully covered by benefits - like summer camps, music lessons, or supplemental ABA hours - while keeping public support intact.
🔗 Related reading: 2025 Texas Medicaid ABA Therapy Criteria Explained · Local ABA Therapy
How Special-Needs Trusts Work in Maryland
First-Party vs. Third-Party Trusts
There are two primary types of SNTs relevant to Maryland families:
- Third-Party SNT: Created by someone other than the beneficiary (parents, grandparents, or guardians) using their own money. These are the most common for parents planning for a child with autism. Funds can be left in a will or living trust, and there is no payback requirement to the state after the beneficiary's death.
- First-Party SNT (Self-Settled SNT): Funded with the disabled individual's own money - for example, from an inheritance, lawsuit settlement, or back payment of SSI. These require a payback to the state for Medicaid costs upon the beneficiary's death. However, they allow the person to keep their benefits while using the money for supplemental needs.
Trustee and Permitted Distributions
The trust must have a trustee - often a family member or professional trustee - who manages the funds and makes distributions only for "supplemental" needs. Distribution can include medical expenses not covered by insurance (like some ABA therapies), education, recreation, clothing, and personal care items. The trust cannot provide food, shelter, or cash directly to the beneficiary without reducing SSI or other benefits.
Maryland-Specific Rules and Options
Medical Assistance and ABLE Accounts
Maryland offers an ABLE (Achieving a Better Life Experience) account program - the Maryland ABLE Plan - that lets people with certain disabilities save up to $16,000 per year (2024 limit) without affecting benefits. Unlike an SNT, ABLE funds can be used for a broader range of expenses, including housing, without penalty. However, the total account limit is capped at $529,000 and the beneficiary must have acquired a disability before age 26. Many families use an ABLE account alongside an SNT for maximum flexibility.
Legal Requirements
Maryland law requires that a special-needs trust be irrevocable. It must also include specific language to comply with state and federal rules. Working with a Maryland special-needs attorney is strongly recommended - they can help draft the trust, choose the right type, and coordinate with your benefits planner.
🔗 Related reading: Autism Resources & Support in Florida: A Family Guide · Apply for ABA
Benefits Planning: Why You Need a Strategy
Benefits planning is the process of reviewing a family's income, assets, and future needs to ensure their child with autism remains eligible for critical programs. In Maryland, this often includes:
- SSI: A federal cash benefit for low-income disabled individuals. It limits assets to $2,000 for an individual ($3,000 for a couple in some cases).
- Medicaid (Medical Assistance): Maryland's program covers a wide range of services, including behavioral health and ABA therapy for eligible children. Asset limits vary but are generally strict.
- Waiver programs: Maryland has Home and Community-Based Services waivers that can fund in-home supports, respite care, and other services. Waitlists exist, so early enrollment is critical.
- Educational services: Individuals with Disabilities Education Act (IDEA) provides some therapies through school, but not always ABA. Benefits planning helps fill gaps.
A good benefits planner can evaluate your child's current and future benefits eligibility, suggest how to structure gifts and inheritances, and help you decide between an SNT and an ABLE account.
How to Set Up a Special-Needs Trust in Maryland
Step 1: Consult Professionals
Meet with a Maryland estate planning attorney who specializes in special needs. Many also work with benefits planners or can refer you to one. Ask about the Maryland Special Needs Trust Act and how recent federal changes (like the SECURE Act) may affect inherited IRAs.
Step 2: Choose the Trust Type and Fund It
Decide between a third-party or first-party trust. For most parents, a third-party trust created in their will is simplest. You can name the trust as a beneficiary of life insurance, retirement accounts, or other assets. Funding with tax-deferred accounts requires careful planning to avoid income tax issues.
Step 3: Name a Trustee
Select a trustee you trust - a family member, friend, or a professional trustee (like a bank or trust company). The trustee must understand the rules of an SNT and be willing to manage distributions responsibly. Consider a co-trustee arrangement if you want family involvement plus professional oversight.
Step 4: Draft and Execute the Trust
Your attorney will draft the trust document, which you sign and notarize. Once set up, you must transfer assets into the trust. For ongoing funding, you can make annual gifts (up to $18,000 per person in 2024) that won't require a gift tax return.
Costs and Insurance: What to Expect
Setting Up a Trust
Legal fees for a special-needs trust in Maryland typically range from $2,000 to $5,000 for a simple third-party trust, depending on complexity. If you also need a will, power of attorney, and healthcare directive (a common package), costs may be $3,000-$7,000. Some attorneys offer flat fees.
Maintaining a Trust
Annual administrative costs vary: a professional trustee may charge 1-2% of assets per year, while a family trustee may do it for free but need tax preparation fees ($200-$500 annually). ABLE accounts have lower maintenance costs (minimal or no annual fees) but less flexibility.
Insurance for ABA Therapy
Maryland requires many private health plans to cover ABA therapy for autism - the state's autism insurance mandate applies to large employer plans. Medicaid (Medical Assistance) also covers ABA for eligible children. However, coverage varies by plan, so it's wise to verify benefits. For help finding a vetted BCBA-led provider that accepts your insurance, use a free matching service like ABA Care Near Me - we connect you with local clinics in Maryland.
Common Mistakes to Avoid
- Not setting up a trust before receiving a large gift or inheritance. A late gift can force you to create a first-party trust with payback rules.
- Naming the child directly as a beneficiary. Even small inheritances can disrupt benefits.
- Using a generic will without special-needs language. Standard wills don't protect benefits.
- Forgetting to update beneficiary designations after creating the trust. Life insurance and retirement accounts bypass wills if not updated.
- Choosing a trustee who doesn't understand SNT rules. Missteps can cause the trust to count as an asset.
- Ignoring ABLE accounts as a complement. They can cover many expenses an SNT cannot, like housing.
Practical Tips for Maryland Families
Start planning early - even before your child turns 18, when benefits eligibility becomes more complex. Attend a free workshop from the Maryland Department of Disabilities or the Arc of Maryland. Keep detailed records of your child's diagnosis, treatments, and therapies, including ABA. This documentation helps with benefits applications and guardianship if needed later. When you're ready to find a provider for ABA therapy, our matching service at ABA Care Near Me can help you connect with vetted BCBA-led clinics in your area.
Remember, a special-needs trust isn't just about preserving benefits - it's about ensuring your loved one has a full, meaningful life with access to therapies, experiences, and community. With careful planning, you can create a financial safety net that protects both their present and future.