Special Needs Planning
Families with a loved one who has a disability face a unique planning challenge: providing for that person's long-term care and quality of life without inadvertently disqualifying them from the government benefits they depend on. We help families build plans that do both.
The Core Challenge
Many individuals with disabilities rely on means-tested government programs — SSI, Medicaid, and state-funded services — that have strict asset limits, often as low as $2,000. A direct inheritance or gift that exceeds that threshold can disqualify your loved one from these benefits, sometimes for years.
Simply leaving assets to a sibling "with the understanding" they will care for your family member is not a legal solution. It leaves your loved one unprotected if that sibling faces financial hardship, divorce, or their own death. Proper legal planning eliminates this uncertainty.
Preserve Benefits
Assets held in trust don't count against SSI or Medicaid
Enhance Quality of Life
Fund extras that government programs don't cover
Fair to All Children
Plans can provide for all children, not just one
Lasting Protection
Trust continues to protect your loved one after you're gone
What a Special Needs Trust Can Pay For
The trust supplements — never replaces — government benefits. It pays for goods and services that enhance the beneficiary's quality of life above and beyond what programs like SSI and Medicaid provide.
Types of Special Needs Trusts
The right trust structure depends on where the funding comes from, the beneficiary's age, and your family's long-term goals.
Third-Party Special Needs Trust
Most Common for Family PlanningFunded with assets belonging to someone other than the beneficiary — typically parents, grandparents, or other family members. Created as part of an estate plan or funded by life insurance. No Medicaid payback is required at the beneficiary's death; remaining assets pass to other named beneficiaries.
- No age limit for the beneficiary
- No Medicaid payback requirement
- Remainder assets pass to family at beneficiary's death
First-Party (Self-Settled) SNT
For Beneficiary-Owned AssetsFunded with the disabled person's own assets — such as a personal injury settlement or an unplanned inheritance. Must be established before age 65. Medicaid payback is required at death from any remaining trust assets.
Pooled Trust
Managed by a nonprofit that pools assets from many beneficiaries for investment purposes while maintaining separate accounts for each. A practical option when individual trust administration would be too costly or when no family member is available to serve as trustee.
Testamentary SNT
Created within a will and funded only at the will-maker's death. Simpler to establish but requires probate and becomes a public document. Often used when the beneficiary is a minor child or when the parents' estate is the primary funding source.
A Direct Inheritance Can Eliminate Benefits
If your will leaves assets directly to a family member with a disability, and those assets exceed program thresholds, SSI and Medicaid eligibility may be lost immediately. This outcome is entirely avoidable with a properly drafted Special Needs Trust in place before your death. Removal of established services can be catastrophic for some people with disabilities.
ABLE Accounts
The ABLE Act allows individuals with disabilities (with onset before age 26) to open tax-advantaged savings accounts without affecting SSI or Medicaid eligibility — up to certain contribution and balance limits.
ABLE accounts are flexible and easy to manage, but annual contribution caps and balance limits make them a complement to — not a replacement for — a Special Needs Trust. We help families understand how the two work together.
Choosing a Trustee
The trustee manages investments, makes distributions, maintains benefit eligibility, and advocates for the beneficiary across their entire life. Selecting the right trustee requires careful thought.
- A family member who knows the beneficiary and will make person-centered decisions
- A professional or corporate co-trustee for financial oversight and continuity
- A trust protector who can monitor and adjust the trust as laws change
- Clear successor trustee provisions for long-term continuity
Letter of Intent
A Letter of Intent is a non-binding document written by parents or caregivers that accompanies the trust — describing the beneficiary's daily routines, medical needs, preferences, relationships, and wishes. It is invaluable guidance for a successor trustee who may not have known the beneficiary personally. We encourage every family to prepare one and update it regularly.
Coordinating the Whole Plan
Special needs planning does not end with the trust document. A complete plan coordinates multiple elements across your entire estate.
Wills for Both Parents
Direct assets to the SNT rather than directly to the beneficiary to avoid benefit disqualification.
Beneficiary Designations
Update retirement accounts, life insurance, and POD accounts to name the SNT as beneficiary.
Guardianship & Conservatorship
Plan for who will have legal authority over personal and financial decisions after the parents are gone.
Life Insurance Funding
Use life insurance to ensure the trust is adequately funded regardless of when parents pass.
Sibling Planning
Address the role of siblings and ensure they are not burdened with caregiving obligations without resources.
Frequently Asked Questions
My child receives SSI and Medicaid. How much can the trust hold?
A properly drafted third-party Special Needs Trust can hold any amount without affecting SSI or Medicaid eligibility. The key is that the trust must be structured correctly and distributions must be made appropriately — we ensure both.
My loved one is over 65. Can we still create a Special Needs Trust?
A first-party (self-settled) SNT must generally be established before age 65. However, a third-party SNT — funded by family assets — has no age limit. We assess your specific situation and identify what options remain available.
What happens to the trust when the beneficiary passes away?
For a third-party SNT, remaining assets pass to named remainder beneficiaries — such as siblings — with no Medicaid payback. For a first-party SNT, Medicaid is reimbursed from remaining assets before anything passes to others.
We have other children. How do we plan fairly for everyone?
A special needs plan can be structured to care for a child with a disability while still leaving meaningful inheritances for other children. We discuss allocation strategies, potential caregiver burdens on siblings, and how to communicate your intentions clearly.
Can a Special Needs Trust pay for housing?
Yes, but with care. Certain housing-related distributions can reduce SSI payments by up to one-third. We advise trustees on how to structure housing support — including trust-owned housing — in ways that minimize benefit impact while maximizing the beneficiary's quality of life.
Planning for a loved one with a disability?
We'll help you build a plan that protects them — now and for the rest of their life.
Schedule a Consultation