Special Needs Planning: What it is, Who it’s for, and Why it’s Important

Since October is Special Needs Planning Month, I figured today we would talk about Special Needs Planning, what it really is, who it applies to, what’s the family should think about it seriously and implement planning for themselves.

What is Special Needs Planning?

Special Needs Planning generally refers to the maintenance of means-tested public or government benefits. Usually we’re talking about SSI and Medicaid, but that could also be state-based programs like food stamps or Supplemental Assistance, or generally other resources or agencies that provide resources to disabled individuals whether that be children or adults, and the maintaining of eligibility for those benefits.

What is the Benefit of Special Needs Planning?

The benefits are generally means-tested, meaning that you must be poor in order to receive them, so while disability is a threshold requirement – the person has to be disabled to the point where they can’t support themselves they can’t achieve what’s called “substantial gainful activity” if they’re an adult, or they have marked or severe impairments if they’re a child, that essentially will not resolve themselves for a period of 12 months or will result in death at some point.

What Does Special Needs Planning Involve?

There are really two rungs to the eligibility piece. SSI Medicaid both require those sorts of disabilities, but also that a person has below a certain level of assets – $2,000 per individual or $3,000 per couple – of countable resources or assets. Countable assets are generally things other than a personal residence and one vehicle and those sorts of things that are required for support and daily activities. Countable assets really relate more to liquid accounts, cash and things I could be converted to cash quickly. Essentially, if you have a certain assets – cash and cash equivalents – they should be used for your support first, and Medicaid or SSI should be the payer of last resort for these sorts of needs and benefits.


What Special Needs Planning is attempting to do is to maintain and preserve those benefits in the event of an unexpected inheritance or gift to the beneficiary of those benefits. The way we structure the planning is to make sure that an inheritance or gift is going to a beneficiary’s trusts 529(a) or ABLE account instead of going to them directly. The assets that go to them, whether that be by inheritance or gift, are not actually received directly by or available to the beneficiary. They’re essentially being held for that beneficiary’s benefit, either by the Trustee of the Trust or by a guardian on a 529(a) Account (529(a) and ABLE are the same thing, but may be used interchangeably).


Generally we are trying to preventing the outright gift or inheritance of assets to the beneficiary directly so that those assets are not available for the purposes of counting against that $2,000 limit. We do that by structuring a special needs trust for a disabled beneficiary or setting up a 529(a) account for the beneficiary.

Who is Special Needs Planning Not Right For?

Again, these are only appropriate to the extent that the beneficiary needs to preserve those benefits. Generally, if a beneficiary is on those benefits they’re worth preserving – there are no other resources that can support or private pay for the needs of this individual. If the individual is a beneficiary of the benefits, they are worth preserving. Special Needs Planning is absolutely important and should be implemented for any family that has a child or adult who is receiving SSI or Medicaid, or any other means-tested benefit.


If you are a family who has substantial means and a high net worth, and can potentially afford to a private pay or self fund the treatment for this individual, then Special Needs Planning may not be the best result for you. The nature of ownership in Special Needs Planning is in a protected capacity – one where the beneficiary does not have direct access to the assets. If they don’t necessarily need to preserve means-tested benefits, it may be a disservice to put them to put those assets into protective capacity that deprives ownership and deprives full use Otherwise that person could pay for their needs individually – over and above what they would normally get from SSI or Medicaid. It may be in the person’s best interest to allow them to have full access to those assets. This would probably apply to a pretty small percentage of families in that situation, but if that is the case, then Special Needs Planning may not be a great result.

Who Should Use Special Needs Planning?

If that’s not the situation you find yourself in – if you’re really thinking past yourselves as to what will happen to your child after you’re gone, what sorts of resources will be there after your gone, after both parents are gone, Special Needs Planning is very appropriate.


Not only are we talking about money management and asset protection, but we also discuss guardianship: getting someone appointed, whether that be a parent or relative or a third-party, to make legal decisions on behalf of an incompetent individual – generally someone who is disabled and cannot make decisions for themselves.


One vastly important piece ends up being who will be there after you’re gone and a lot of times I’m working with families who don’t have anyone there past themselves, and parents of minor children who are disabled. The worst-case scenario if you’re the parents is that no one will end up being there when you’re gone. I work with a lot of families who have disable minor children who in all likelihood will outlive any trustee who could be designated to take care of funds for them, or any guardian who maybe appointed to manage their affairs are make living decisions for them. Part of the legal planning process is figuring out what sorts of potential institutional or corporate trustees and institutional or corporate guardians or group homes may be there, and may be appropriate choices to help with the day-to-day, the legal decisions, and the management of assets after the parents and relatives are gone. 

Is it just Creating a Special Needs Trust?

Special Needs Planning encompasses a lot more than just the creation of trust or the creation of a 529(a), it’s actually looking at the totality of the circumstances – the entire comprehensive plan – and making sure that there’s financial piece involved as well. We must make sure that we’re coordinating with financial visors and CPAs and making sure that everyone is on the same page, that the legal aspects are married with or collaborative with the financial aspects so that if something does happen, unexpectedly or not, the disabled individual should have the funding to be able to support themselves throughout the rest of their life. 


Part of that is working with financial advisors and planning out what we call a “life care plan” to forecast what types of medical expenses they could encounter that may be over and above what their benefits may cover, or in the event that Medicaid is lost or is removed entirely. The regulatory nature of Special Needs Planning is that Social Security and Medicaid may not last forever, whether due to the lack of funding or its removal entirely. Part of the planning is to make sure there’s adequate funding in place in case there’s no benefits to maintain.


On the outside looking in, it may seem like Special Needs Planning is just a way for us to create a trust and everybody’s happy and fine and will go on always, but actually Special Needs Planning is much more about creating a relationship between the attorney and the family, involving the financial advisor, and all of us together making sure that the plan works forever. The plan evolves with the family, so that as any sort of changes in regulation occur, we are tweaking the plan and the finances to make sure that they are still good and are going to satisfy the intentions of the plan. All of this works together.

Failing to Plan is Planning to Fail

If you find yourself in that sort of circumstance where you have a child or you have a relative who is disabled and needs to maintain these benefits, then Special Needs Planning is right for you.

Paul Yokabitus