When a loved one has special needs, estate planning takes on an added layer of responsibility. Parents, grandparents, and caregivers often worry: How do I provide for my child or loved one without jeopardizing their eligibility for important benefits?
Here are three key tools we covered in our team’s recent Brain Boost session:
- Special Needs Trusts (SNTs)
A properly drafted Special Needs Trust allows assets to be set aside for the benefit of a disabled loved one without disqualifying them from needs-based government programs like SSI or Medi-Cal. Instead of inheriting assets directly, the trust holds funds that can be used for supplemental needs — things that improve quality of life, such as transportation, therapies, education, hobbies, or recreational activities.
There are two main types:
First-Party SNTs – funded with the beneficiary’s own assets (such as an inheritance or personal injury settlement).
Third-Party SNTs – funded with assets from parents, grandparents, or other loved ones.
Choosing the right type is critical, since first-party SNTs may require repayment to Medi-Cal upon the beneficiary’s passing, while third-party SNTs do not.
- ABLE Accounts
An ABLE Account (Achieving a Better Life Experience) is a tax-advantaged savings account for individuals with disabilities. These accounts are easy to set up and provide flexibility: the funds can be used for qualified disability expenses such as housing, education, health, and transportation.
Key features include:
Annual Contribution Limit: $18,000 (as of 2025; indexed periodically).
Tax Benefits: Growth is tax-free, and withdrawals for qualified expenses are not taxed.
Independence: ABLE accounts are often managed by the beneficiary themselves (with support if needed), which can foster independence and financial empowerment.
Families often use ABLE accounts in tandem with Special Needs Trusts — the trust for larger inheritances or gifts, and the ABLE account for day-to-day, flexible spending.
- The Role of Caregivers and Trustees
Planning isn’t just about money — it’s about people. One of the most important (and emotional) decisions families face is who will step in to care for their loved one if they no longer can.
Families should consider:
Trustee Selection: A trustee is responsible for managing the Special Needs Trust. Sometimes this is a family member; in other cases, a professional fiduciary is a better fit.
Caregiver/Guardian Roles: Who will make medical, educational, and personal decisions? These roles can be split from the trustee role to balance emotional support with financial oversight.
Letters of Intent: While not legally binding, this is a powerful document where parents can share their child’s routines, preferences, medical needs, and hopes for the future — providing guidance for whoever steps in.
Why This Matters
Without proper planning, a well-intentioned gift — even something as simple as leaving money directly to a child with special needs — can cause them to lose critical benefits. With the right structures in place, however, families can ensure their loved one is cared for financially, medically, and personally, while maintaining eligibility for essential programs.
✅ Takeaway:
If you have a child, grandchild, or loved one with special needs, thoughtful estate planning can give you peace of mind today and security for them tomorrow. Even small missteps can have big consequences, which is why it’s so important to plan ahead with professional guidance.
💬 If you’d like to learn more about Special Needs Trusts or ABLE accounts, schedule a Discovery Call with us here.