Special needs planning is designed to provide a way to take care of a disabled family member without disrupting the individual’s eligibility for government benefits. As importantly, planning for a disabled family member includes making decisions as to who will take care of a disabled family member after their current caregiver becomes disabled or dies.

Planning for a person with special needs requires particular legal and financial expertise. The following information may help one navigate the planning process and gain further understanding of some of the basic planning techniques and benefits unique to persons with special needs.

ABLE Accounts

An ABLE account, sometimes referred to as a 520 ABLE or 529A account is a state run savings program for eligible persons with disabilities. The ABLE Act (Achieving A Better Life Experience Act) was signed into law in 2014 and allows qualified individuals to open an ABLE account without losing eligibility to public benefit programs.

Eligibility: Individuals with a disability that occurred before age 26.

  • Automatic Eligibility: Individuals receiving benefits under SSI (Supplemental Security Income) and/or SSDI (Social Security Disability Insurance).1
  • Other Eligibility: Meet the 26 age of onset requirement and meet Social Security’s definition and criteria regarding significant functional limitations and receive a letter of certification from a licensed physician.

Plan Benefits: Earnings in the account are 100% federal and in some states, state tax free. Withdrawals to pay for disability related expenses are also federal and in some states, state tax free.

The assets in an ABLE account, up to $100,000 will not affect an individual’s ability to receive SSI and Medicaid. If the $100,000 limit is exceeded, a person’s SSI benefits would be suspended until the balance drops back below the $100,000 limit. However, the account owner can continue to receive Medicaid benefits.

In 2024, $18,000 of post- tax dollars can be contributed each year to th account from the account owner/beneficiary, friends, or family. Under current law, if the account owner/beneficiary is employed, an additional contribution of up to their current year gross income not to exceed $14,580 (2024) can be contributed to the account.

Qualified Expenses: The funds in an ABLE account can be used for many different disability related expenses, including education, housing, transportation, employment support, health, wellness, assistive technology, and miscellaneous expenses.

Special Needs Trusts

A special needs trust is a specialized trust that allows the disabled beneficiary to enjoy the use of the property that is held in the trust for his or her benefit, while at the same time allowing the beneficiary to receive needs-based government benefits.

First-Party SNT: A first party SNT is funded by the beneficiary with their own funds. Typically, the funds come from an inheritance received outright or a court settlement. A first party SNT must state that after the beneficiary’s death, all amounts remaining in the SNT, up to an amount equal to the total lifetime medical assistance benefits paid on behalf of the beneficiary by a Medicaid program of any state are first repaid to those state Medicaid programs, event to the extent of fully exhausting the trust funds. Only after the Medicaid payback may any balance be distributed to other beneficiaries.

Third-Party SNT: A third party SNT is generally established and funded by any other person (other than the beneficiary). The third party SNT can be included in a Will or Revocable Trust to be funded after the person’s death or drafted as a stand-alone trust.

Upon the beneficiary’s death, the third party SNT is not required to use the remaining assets to reimburse any state(s) for the Medicaid benefits received by the beneficiary during his or her lifetime.

A Comparison of ABLE Accounts and Third-Party Special Needs Trusts

ABLE AccountsThird-Party SNT
Eligibility:Only persons disabled before age 26Any person with a disability
How many can a person have?OneUnlimited
Who can fund?Anyone including account owner/beneficiaryAnyone except beneficiary (Beneficiaries must use a first-party SNT)
How much can be funded in one year?$18,000 (annual gift exemption) additional amount from current year gross income not to exceed $14,580Unlimited/gift tax rules apply
Caps:$100,000 limitation for SSI recipientsNone
Who inherits on death of the person with a disability?Medicaid first except in CA, VA, PA and then the beneficiary’s heirsPer the terms of the trust
Income tax implications:No income taxIncome tax due: Taxpayer is dependent on whether trust is a Grantor trust or a Non-Grantor trust
Eligible distributions:Qualified disability expensesNo limitations except that certain distributions will reduce or eliminate SSI eligibility

Choosing a Guardian/Care Giver

Choosing the right person who is willing to act as guardian with the responsibilities of caring for a child if a parent becomes disabled or dies can be overwhelming. This challenge is often compounded when the child has special needs and will required care well beyond their 18th birthday.

It is important for a parent of a special needs child to have an open conversation with potential caregivers and assess whether the person can realistically be able to take on the responsibility of caring for the child. Since changes in people’s lives are inevitable, it is wise to have a back up plan. While living with a family member may seem like the best situation, licensed group homes or assisted living facilities may also be a good choice if living with a family member or close friend is not a viable option. Exploring these other options may help alleviate some anxiety in making this important decision.

In addition, with a disabled family member who may not be able to communicate their needs, having a detailed letter of intent outlining important information about the child’s life will help others make better decisions for them.

Choosing a Successor Trustee

In addition to finding the right caregiver for a disabled family member, looking for a person or entity that manages and invests the assets, pays the bills and coordinates with caregivers and case managers is vital to the financial well being of the special needs person. Options include a family member or friend, bank or trust company, or a private professional fiduciary. The trust documents may also name a “trust protector”, typically a family member who can review financial accountings and has the power to remove and replace a professional trustee.

In Conclusion

Wealthier families who have the resources and may wish to fund their disabled child’s care may wonder if it still makes sense to consider a special needs trust for their child. The answer may be that a special needs trust is still appropriate. Structuring ownership of financial assets that allows a child to receive SSI and Medicaid will also qualify the child for placement in many high quality group homes or day programs that would not otherwise be available to the child. Also, while the funds from a special needs trust cannot pay for expenses that SSI and/or Medicaid pay for, the trustee of a special needs trust can pay for many things that the beneficiary needs and makes the life of the beneficiary better.

Consulting with an expert in this area who can advise on your family’s situation will lead to the best outcome for the entire family.


SSI: Supplemental Security Income

SSI provides financial assistance to older adults (age 65+) and persons with disabilities (regardless of age) who have very limited income and resources. (Needs based benefit)

SSDI: Social Security Disability Insurance

SSDI provides a financial benefit to individuals who are disabled and have a qualified work history either through their own employment or a family member (spouse/parent). (Based on disability and work credits)

Eligibility:Age (65+) or blindness (any age) or disability (any age) and limited/no income and resources ($2,000)Disability and sufficient work credits
through own/family employment
Benefits commence:1st full month after the date the claim was filed or if later, the date found eligible for SSI6th full month of disability, 6 month period begins with the first full month after the date SSA decides disability began
Maximum Monthly Federal Benefit:$943 (single)/ $1,415 (married couple in 2024 (based on income)$3,822 in 2024 (based on work history)
Health Insurance Coverage:Automatically qualify for MedicaidAutomatically qualify for Medicare after a 24-month waiting period from time benefits begin
  • It is possible to get both SSI and SSDI if an individual has both limited income/resources and a work history.
  • Some states supplement the federal SSI benefit with additional payments.

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