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Planning ahead for loved ones with special needs
For families who care for someone with special needs, providing day-to-day love and support isn’t just a responsibility, it's a calling. Their child, spouse, or sibling’s comfort and happiness shape nearly every decision they make. But one of the hardest questions these families face is how that care will continue when they’re no longer there to give it.
Estate planning for a loved one with special needs comes with unique challenges and important opportunities. Working with an attorney who understands special needs trusts and disability benefits can help families protect eligibility for essential programs while ensuring their loved one is financially secure for the long term.
What families often worry about
Many individuals with disabilities rely on public or private benefits to help cover everyday living expenses, especially when working full-time isn’t possible. These programs are means tested, which means even small financial changes can affect eligibility. The process of applying or reapplying for benefits can be long and stressful.
That’s why it’s so important for families to plan carefully. Leaving an inheritance directly to a loved one through money, retirement accounts or other assets can unintentionally put their benefits at risk. With the right guidance, families can make sure their support continues seamlessly, without disrupting vital assistance.
Helping families find peace of mind
Encouraging clients to sit down with an estate planning attorney who specializes in special needs planning can be one of the most meaningful steps they take. The result is more than just financial security. It’s the peace of knowing their loved one will always be cared for.
For financial professionals, serving this community is about more than planning. It’s about partnership. Build relationships with estate planning attorneys, CPAs and other professionals who share your commitment to helping families with special needs thrive. Together, you can create lasting impact for clients who have spent their lives giving so much of themselves.
Strategies and solutions
Special needs trusts
A special needs trust is a popular strategy for those who want to help someone in need without the risk of the person losing their eligibility for programs that require their income or assets to remain below a certain limit. A special needs trust is designed to help cover a person’s financial needs that are not covered by public assistance payments. The assets held in the trust do not count to qualify for public assistance. Special needs trusts are an option open to parents, grandparents, friends or anyone wishing to leave an inheritance or other assistance to care for someone with physical or cognitive disabilities.
Typically, this type of trust is an irrevocable trust. That means it cannot be modified, amended, or terminated without permission from the grantor’s beneficiaries. The assets in a special needs trust can’t be seized by creditors or by someone who wins a lawsuit.
ABLE Accounts
The 529A ABLE (Achieving a Better Life Experience) Savings Plan was created in 2014 to help families of disabled children save for disability expenses, including education, job training, healthcare and financial management, to supplement private insurance and public benefits. Like 529 college savings accounts, these savings accounts have similar tax advantages.
Pooled trusts
For a smaller inheritance or for families who don’t have a reliable trustee candidate, a pooled special needs trust might be a good option. This is often a cost-effective solution because the funds of many beneficiaries are combined into one trust for administrative and investment purposes. Sub-accounts are created for each beneficiary, with the disabled person’s account receiving a proportionate share of the entire fund’s earnings. A nonprofit organization manages pooled trusts, but fees, services and contracts vary.
Purchasing exempt resources
Purchasing exempt resources, such as an automobile or residence, can be an effective strategy for some people, particularly when combined with a pooled trust or ABLE account.
Materials for you
Now that you have collected the necessary information, you can design the appropriate financial strategy to fit your clients’ needs.
The ABLE Act is a tax-advantaged savings account designed for individuals to help pay for qualified disability expenses. Participation in a ABLE Account does not guarantee that the contributions and investment returns will be adequate to cover all expenses related to the designated beneficiary as a result of living with disabilities. Contributors to the plan assume all investment risk, including the potential for loss of principal, and any penalties for non-qualified disability withdrawals.
Each state's ABLE program will have different investment choices, costs and fee structures. You should consult with your financial, tax or other advisor to learn more about how state based benefits (including any limitations) would apply to your specific circumstances. You may also wish to contact the state specific plan Program Administrator to learn more about the benefits that might be available to you by investing in the an ABEL Account. Not all states have an ABLE program.
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