Key Takeaways
- Planning for the long-term financial security of a special needs loved one requires specialized strategies and an intentional approach.
- Without a plan in place, you may inadvertently jeopardize your family member’s eligibility for essential government benefits.
- A qualified financial advisor can help you implement a special needs planning strategy to support your loved one’s needs.
Planning for the long-term financial security of a loved one with special needs requires specialized strategies and an intentional approach to help ensure adequate assets are available without jeopardizing your loved one’s eligibility for essential benefits, such as Supplemental Security Income (SSI) and Medicaid.
If your goals include providing financial support for a loved one with special needs, the following strategies can help you navigate the complexities you face.
Understand Government Benefits Eligibility
Before taking action, it is important to understand eligibility requirements for government benefits. Your loved one will likely benefit from SSI and Medicaid; however, there are strict income and asset limits that impact eligibility for these programs.
For example, in 2026 SSI is typically not available to individuals who:
- Earn more than $2,073 from work each month
- Have more than $2,000 in assets ($3,000 per couple)
- Are younger than 64 or do not have a disability that severely limits their daily activity
SSI is the gateway to Medicaid, which makes it especially important to understand these eligibility requirements and take steps to ensure your planning strategies do not disqualify your loved one from this essential support.
Establish a Special Needs Trust (SNT)
An SNT holds assets on behalf of a special needs individual without jeopardizing his or her eligibility for benefits. Because the assets are held in the trust, rather than by the individual, they are not counted toward the individual’s asset limit for SSI and Medicaid eligibility. And SNT assets can be used to pay for a wide range of daily living expenses that are not covered by government benefits, such as home furnishings, vacations, assistive technologies, medical therapies and more.
An SNT provides benefits, such as:
- Preserving eligibility for government benefits
- Ensuring assets are preserved for the use of a special needs individual
- Protecting a special needs individual from financial fraudsters and predators
Contribute to an ABLE Account
Another strategy that can be used on its own or in combination with an SNT is an ABLE account. Created by the 2014 Achieving a Better Life Experience Act, these vehicles allow individuals with disabilities to save up to $19,000 per year (2025) in a tax-advantaged account. Funds up to $100,000 typically do not jeopardize SSI benefits eligibility, and withdrawals for qualified disability expenses are tax-exempt.
Similar to SNTs, ABLE accounts do not interfere with benefits eligibility, and contributions to these accounts can be made by the account holder as well as by friends and family members. Funds held within an ABLE account are typically easier for the special needs individual to access, because the account is owned and managed by the individual, which means that there is no trustee approval required for distributions. And ABLE funds can be used to pay for a broader range of expenses than SNT assets.
On the downside, any assets remaining in the account following the account holder’s death may be relinquished to reimburse the state Medicaid agency for services rendered. Also, in order to be eligible for an ABLE account, the individual’s condition or disability must have occurred before age 26.
Update Your Estate Planning Documents
To ensure your assets pass to your special needs loved one as intended, it is vital to have the proper estate planning documents in place, including the following.
Will
Designating your loved one as a beneficiary in your will is likely to jeopardize his or her benefits eligibility. Instead, consider designating the SNT as the beneficiary of any assets you would like your special needs heir to inherit.
Guardianship designation
If your loved one requires lifelong care, it is important to designate a guardian who can make decisions about daily life activities, living arrangements, healthcare, education, legal matters and more. Work with a qualified estate planning attorney to ensure your guardianship wishes are properly incorporated into your estate and financial plans.
Letter of intent
While not a legally binding document, a letter of intent allows you to express your wishes and inform your executor and the court of your intentions following your death. This can be an effective way to document your loved one’s needs, routine, preferences and other concerns to future caregivers and trustees.
If you could use some help planning for the financial security of a special needs loved one, we would love to have a conversation. Please schedule a call to learn more.
