Coordinated Counsel
Beneficiaries with Special Needs
Transcript
BARRY:
Special needs planning is another important consideration. In most cases, you don’t want these beneficiaries to receive money directly, because doing so can disqualify them from receiving government benefits. If they have assets in their name, they’re typically required to use those first.
CHAD:
And this doesn’t just apply to parents, right? If grandparents or other family members leave money directly to a special needs individual, that could also impact their eligibility?
BARRY:
Exactly. You want to make sure you’re not inadvertently disqualifying a beneficiary. The asset limits for certain benefits are very low, which surprises a lot of people.
At a high level, the government’s position is simple: if you have available resources, you’re expected to use them before receiving assistance.
CHAD:
So how do you plan around that?
BARRY: Special needs is an important one. Primarily you want these beneficiaries to not receive money. Because if they receive money, they get disqualified from receiving benefits. Because if you have money, you gotta use it.
CHAD: You can elaborate more on this, but it’s not just the parents, correct? If grandparents leave a special needs child money, that can also count against them, correct?
BARRY: New number 18. Yeah. You want to make sure that you’re not inadvertently disqualifying special needs beneficiaries.
CHAD: And what is that number? I know it’s incredibly small. People are shocked when they hear how small the number is that the special needs child can receive, but I’m not sure exactly what it is.
BARRY: There’s different bodies of law that related to what you’re talking about. So just to keep it simple, the government basically says if you have money, you have to use that money first. So if you put the money into a trust and the trust is for the benefit of a special needs child or adult, the trustee is controlling it and the beneficiary has no rights to it. They don’t own it. They have no way to compel distribution. It’s not counted.
So they can continue to keep benefits, and then you have this supplemental income. I’ll refer to it as a supplemental needs trust for that reason. It’s just a tragedy to see this type of thing happen because people don’t know better.
So you group substance abuse with special needs beneficiaries into the same concept of protecting the beneficiaries assets or protecting their inheritance.
Protecting What Matters Most: A Guide to Special Needs Estate Planning
By: Barry E. Haimo, Esq.
April 23, 2026
For families with a loved one who has special needs, estate planning isn’t just about passing down assets. It’s about preserving stability, access to care, and quality of life. And without the right plan in place, even well-intentioned decisions can have serious consequences.
The Risk Most Families Don’t See Coming
Many individuals with special needs rely on government benefits like Supplemental Security Income (SSI) or Medicaid to cover basic living expenses and healthcare. Unfortunately, these programs have strict asset limits.
That means if a beneficiary receives money directly (whether from a parent, grandparent, or other family member) it can:
- Disqualify them from essential benefits
- Interrupt medical care or support services
- Create financial and administrative challenges
In other words, what was meant to help can unintentionally cause harm.
Why a Simple Will Isn’t Enough
A traditional estate plan that leaves assets outright to beneficiaries doesn’t account for these rules. Even a modest inheritance can push someone over eligibility limits. And once benefits are lost, it can be difficult and time-consuming to restore them.
This is where special needs planning becomes critical.
A supplemental needs trust (also called a special needs trust) allows you to set aside funds for your loved one without putting their benefits at risk.
Here’s how it works:
- Assets are held in the trust, not in the beneficiary’s name
- A trustee manages the funds and makes distributions
- The beneficiary cannot demand or control the money directly
- Funds are used to supplement, not replace, government benefits
This structure allows your loved one to maintain eligibility while still benefiting from additional financial support.
What the Trust Can Cover
A properly structured trust can enhance quality of life in meaningful ways, including:
- Therapies and medical treatments not covered by insurance
- Education, training, or personal development
- Travel and experiences
- Technology, equipment, or home modifications
It’s about providing opportunities — not just meeting basic needs.
This Goes Beyond Parents
One of the most commonly overlooked issues is that any inheritance can create problems, not just those from parents.
That includes:
- Grandparents
- Aunts and uncles
- Family friends
Without coordination, someone may unknowingly leave assets directly to a special needs individual, undoing careful planning. A comprehensive plan often includes clear instructions and communication with extended family to prevent this.
Choosing the Right Trustee
Your trustee plays a critical role. They’ll be responsible for:
- Managing funds responsibly
- Understanding benefit rules
- Making thoughtful distribution decisions
This can be a trusted individual, a professional, or a combination of both.
Ultimately, special needs estate planning requires more than standard documents. It requires an understanding of how financial decisions impact real-world care and support.
When done well, it ensures:
- Continued access to essential benefits
- Financial support that enhances quality of life
- Peace of mind for the entire family
Because this kind of planning isn’t just about protecting assets. It’s about protecting your loved one’s future.
Schedule a consultation to learn how we can help.
And if you’re interested in getting all of your advisors on the same page, get in touch with Kinnect Financial.
