Special Needs Planning
Leaving an inheritance to a loved one with a disability the wrong way can disqualify them from SSI and Medicaid benefits. A properly structured Special Needs Trust can hold assets for them without affecting benefits — and can be coordinated across the whole family’s plan.
What you should know
- SSI generally limits countable resources to a small dollar threshold. A direct inheritance above that limit can suspend or end benefits until the funds are spent down.
- A third-party Special Needs Trust — funded by parents or other family members — has no Medicaid payback requirement and can be funded through wills, life insurance, and direct gifts.
- A first-party Special Needs Trust — funded with the beneficiary’s own assets — typically must be established before the beneficiary turns 65 and generally includes a Medicaid payback provision.
- An ABLE account can let certain people whose disability began early in life hold limited assets without affecting SSI — useful for smaller savings goals, but limited in scale.
- The most common failure in special needs planning is a coordination gap — a grandparent who did not know about the trust leaves money outright, and benefit eligibility is disrupted.
Is your special-needs plan in place?
Five quick questions about your special-needs plan. Brent reads your answer back to you at the end.
A 30-second guided check. See whether your plan is set up to protect SSI and Medicaid eligibility.