Protecting Your Loved One’s Benefits and Quality of Life
When you have a child, grandchild, or other family member with disabilities, your estate planning must address a critical question: How can I provide for my loved one without jeopardizing their government benefits?
Without proper planning, a well-meaning inheritance could disqualify your loved one from SSI, Medicaid, and other programs that provide essential healthcare, housing assistance, and support services. Learn more about how special needs trusts protect government benefits. A special needs trust solves this problem by providing supplemental resources while preserving benefit eligibility.
Types of Special Needs Trusts
Third-Party Special Needs Trust
This is the most common type of special needs trust for families. It’s funded with assets from parents, grandparents, or others—not from the beneficiary’s own resources.
Key features:
- No Medicaid payback requirement at the beneficiary’s death
- Remaining assets can pass to other family members
- Can be established during your lifetime or through your will
- Flexible distribution standards
First-Party (Self-Settled) Special Needs Trust
When a person with disabilities receives their own funds—from an inheritance, lawsuit settlement, or other source—a first-party trust can preserve benefit eligibility.
Key features:
- Funded with the beneficiary’s own assets
- Requires Medicaid payback provision
- Must be established before age 65
- Specific legal requirements under federal law
OBRA Trusts (Pooled Trusts)
For beneficiaries over 65 or those who prefer professional management, pooled special needs trusts (often called d4C trusts) offer an alternative to individual trusts.
ABLE Accounts
ABLE (Achieving a Better Life Experience) accounts provide a simpler option for smaller amounts. They allow individuals with disabilities to save up to $100,000 without affecting SSI eligibility.
What Can a Special Needs Trust Pay For?
A properly administered special needs trust can dramatically improve quality of life by paying for:
- Recreation and entertainment (vacations, sports, hobbies)
- Technology (computers, tablets, specialized equipment)
- Education and training (classes, tutoring, job coaching)
- Transportation (vehicle purchase and maintenance, ride services)
- Personal items (clothing above basic needs, furniture)
- Companion services (aides for outings and activities)
- Specialized therapy (beyond what Medicaid covers)
- Home modifications (accessibility improvements)
The trust supplements government benefits rather than replacing them. Basic food and shelter typically come from SSI and other programs, while the trust provides enhancements that improve daily life.
The Letter of Intent
Beyond the legal documents, we help you create a Letter of Intent—a non-binding document that provides guidance to future caregivers and trustees. This letter describes:
- Your loved one’s daily routines and preferences
- Medical history and current treatments
- Educational background and abilities
- Social relationships and activities
- Future goals and wishes
- Family members and their roles
While not legally binding, this letter provides invaluable context for those who will care for your loved one after you’re gone.
Choosing a Trustee
Selecting the right trustee is one of the most important decisions in special needs planning. The trustee must:
- Understand government benefit rules
- Manage trust investments prudently
- Make appropriate distribution decisions
- Keep detailed records
- File tax returns
Options include:
- Family members (often siblings or other relatives)
- Professional trustees (banks or trust companies)
- Pooled trust organizations (nonprofit trustees)
We’ll help you evaluate the options and make the best choice for your family.
Coordinate Your Entire Estate Plan
Special needs planning doesn’t exist in isolation. We help coordinate your entire estate plan to ensure:
- Other children are treated fairly
- The special needs trust is properly funded
- Grandparents and other family members understand how to give appropriately
- Life insurance and retirement accounts name the right beneficiaries
Schedule Your Special Needs Planning Consultation
If you have a loved one with disabilities, proper planning is essential. Call 847-410-9131 to schedule your consultation. We’ll discuss your family’s situation and explain how special needs planning can protect your loved one’s benefits while enhancing their quality of life.
