Caring for a person with special needs has unique challenges and often requires significant resources to cover the additional expenses for care. Special needs planning is designed to help people provide for 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 care for them if their current caregiver becomes disabled or dies.

Planning for a person with special needs requires legal and financial expertise. The following information is intended to help individuals 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 529 ABLE or 529A account, is a tax-advantaged 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 for public benefits programs.

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

Automatic Eligibility: Individuals receiving benefits under Supplemental Security Income (SSI) and/or Social Security Disability Insurance (SSDI).

Other Eligibility: Meet the age of onset requirement (26 years old) 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 generated in an ABLE account are 100% exempt from federal tax and in some states earnings are tax-free. Withdrawals to pay for disability-related expenses are also exempt from federal tax. The same is true in some states.

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 below the $100,000 limit. However, the account owner can continue to receive Medicaid benefits even if the account assets exceed $100,000.

As of 2022, up to $16,000 of post-tax dollars can be contributed to the account each year from the account owner/beneficiary, friends or family. If the account owner/beneficiary is employed, an additional contribution of up to their current year gross income (not to exceed $12,880) 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 (SNT) 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 either 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, even to the extent of fully exhausting the trust funds. Only after Medicaid is paid back in full may any balance be distributed to other beneficiaries.

Third-Party SNT: A third-party SNT is generally established and funded by any person other than the beneficiary. The third-party SNT can be either included in a will or revocable trust to be funded after the person’s death or drafted as a stand-alone trust and funded at any time . 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
EligibilityOnly 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?$16,000 (annual gift exemption amount) plus an additional amount equal to the current year gross income not to exceed $12,880 (2022)Unlimited/gift tax rules apply
Caps$100,000 limit for SSI recipientsNone
Who inherits on death of the person with a disability?Medicaid first except in CA, VA and PA and then the beneficiary’s heirsPer the terms of the trust document
Income tax implicationsNo income taxAmount of income tax due is dependent on whether trust is a grantor trust or a non-grantor trust
Eligible distributionsQualified 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 require care well beyond their 18th birthday.

It is important for parents of a special needs child to have an open conversation with potential caregivers and assess whether the person can realistically 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 planning to have the child live 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 such an important decision.

Additionally, because a disabled family member may not be able to communicate his or her 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

On top of finding the right caregiver for a disabled family member, looking for a trustee—the person or entity that manages and invests the assets in a trust, pays the bills, and coordinates with caregivers and case managers—is vital to the financial well-being of the special needs person. Options for the trustee 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.

Improving the Life of a Special Needs Child

Wealthier families who have the resources to fund their disabled child’s care may wonder if it still makes sense to consider a special needs trust for their child. It’s quite possible that a special needs trust is still appropriate. Structuring ownership of financial assets that allows a child to receive SSI and Medicaid benefits 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.

If you have questions about providing for a special needs child, don’t hesitate to reach out to your advisor at Cerity Partners. Consulting with an expert in this area who can advise on your family’s unique situation will lead to the best outcome for the entire family.

Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser with offices throughout the United States. Registration of an Investment Advisor does not imply any level of skill or training. The foregoing is limited to general information about Cerity Partners’ services, which may not be suitable for everyone. You should not construe the information contained herein as personalized investment, tax, or legal advice. There is no guarantee that the views and opinions expressed in this brochure will come to pass. Before making any decision or taking any action that may affect your finances or your company’s finances, you should consult a qualified professional adviser. The information presented is subject to change without notice and is deemed reliable but is not guaranteed. For information pertaining to the registration status of Cerity Partners, please contact us or refer to the Investment Adviser Public Disclosure website ( For additional information about Cerity Partners, including fees and services, send for our disclosure statement as set forth on Form CRS and ADV Part 2 using the contact information herein. Please read the disclosure statement carefully before you invest or send money.


SSI: Supplemental Security Income

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

SSDI: Social Security Disability Insurance

SSDI is a federal insurance program that 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). The program is based on disability and work credits.

EligibilityAge (65+) or blindness (any age) or disability (any age) and limited/no income and resources (max $2,000)Disability and sufficient work credits through own or family employment
Benefits CommenceFirst full month after the date the claim was filed or if later, the date found eligible for SSISixth full month of disability; Six-month period begins with the first full month after the date Social Security Administration decides disability began
Maximum Monthly Federal Benefit$841 (single) / $1,261 (married couple) in 2022 (based on income)$3,345 in 2022 (based on work history)
Health Insurance CoverageAutomatically qualify for Medicaid upon receiving SSIAutomatically 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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