Estate planning: A piggyback ride that lasts a lifetime.© NDABCREATIVITY/stock.adobe.comIf you’re caring for a loved one with special needs, you may be thinking about how to enhance their care without compromising their eligibility for government benefits. Or perhaps you’re considering ways to provide for them after your death. Estate planning can be challenging in the best circumstances, but there’s additional complexity in setting up accounts and trusts for a family member with special needs.

　　The good news is you have choices, depending on the circumstances of your estate and the family member who needs lifetime care. Along with the Achieving a Better Life Experience (ABLE) account, various other trusts are available, including two types of special needs trusts that may be right for your family.

　　Comparing estate planning options for family members with disabilities

Option	Purpose	Who can contribute	Effect on benefits	Notable features
ABLE account	Covers disability-related expenses	Beneficiary, family members, others	No impact on SSI up to $100,000; no impact on Medicaid	Direct control by beneficiary; tax-advantaged; annual contribution limits
Individual special needs trust	Supports personal needs without affecting benefits	Family members or the beneficiary (depending on type)	No impact on Medicaid or SSI if managed properly	Customizable; must include Medicaid payback for first-party trusts
Pooled special needs trust	Combines resources for professional management	Beneficiary, family members, others	No impact on benefits if managed properly	Lower costs; managed by a nonprofit; Medicaid payback requirement
Testamentary trust	Provides for a beneficiary after the grantor’s death	Established through the grantor’s will	No impact on benefits when properly managed	Created upon grantor’s death; requires probate; customizable for special needs
Revocable living trust	Manages assets during the grantor’s lifetime and after death	Grantor	Assets are considered part of the estate for tax purposes	Flexible terms; avoids probate; compatible with other trusts

1. ABLE accountThe ABLE account, established under the 2014 Achieving a Better Life Experience Act, is a tax-advantaged savings option created for individuals with disabilities. Someone diagnosed with a qualifying disability before age 26 can open an ABLE account to fund disability-related expenses without affecting their eligibility for government benefits. Beginning January 1, 2026, the age limit will rise to 46, expanding access for older disabled individuals.

　　Hold up to $100,000 without impacting Supplemental Security Income (SSI) eligibilityAvoid any impact on Medicaid eligibility, regardless of account balanceAccept contributions from anyoneProvide beneficiaries and their guardians direct control over the funds, with no need for a trusteeABLE accounts may coexist alongside various special needs trusts without negatively affecting the beneficiary’s finances. Like other tax-advantaged investment accounts, such as Roth individual retirement accounts (Roth IRAs), ABLE accounts have annual contribution limits that adjust annually with the rate of inflation. For the 2024 tax year (reported on returns filed in 2025), the base contribution limit is $18,000. If the account owner doesn’t participate in a workplace retirement plan, the limit is $32,580 (and even higher for residents of Alaska and Hawaii).

　　2. Individual special needs trustAn individual special needs trust (SNT) is a fund designed to provide financial support to someone with disabilities without jeopardizing their eligibility for government benefits such as Medicaid and Supplemental Security Income. The trust, which is managed by a trustee, holds and disburses assets for the benefit of the intended recipient.

　　A first-party special needs trust is funded with the disabled individual’s own assets, while third-party SNTs are funded with contributions from others, such as family members.

　　Individual special needs trusts can be costly to establish and maintain and administratively burdensome, but they offer some key benefits, such as:

　　Preserving eligibility for government benefits when managed properlyAllowing the flexible use of funds for personal needs not covered by government programsHolding an unlimited amount of assets (third-party SNTs only)Offering customization to meet the unique needs of the beneficiaryA first-party special needs trust must include a Medicaid payback provision, which requires that any money remaining in the fund upon the beneficiary’s death be used to repay Medicaid for services rendered in their lifetime. Medicaid tracks these services, and any funds exceeding the value of the services are distributed to a secondary beneficiary.

　　Individual special needs trusts are compatible with other types of trusts and accounts, which may contribute to individual SNTs. Trustees play a crucial role in managing individual special needs trusts by ensuring that the beneficiary doesn’t receive cash or any direct support from the trust that could interfere with their ability to collect Medicaid or SSI.

　　3. Pooled special needs trustA pooled special needs trust is a simpler option for those seeking to avoid recordkeeping and account management. This type of trust is typically managed by a nonprofit organization and combines the assets of multiple individuals with disabilities into one collective investment pool. Each beneficiary retains a separate account within the pool, with the nonprofit serving as the trustee that manages the fund on behalf of all beneficiaries.

　　If you’re managing a small estate with no unique circumstances, you may be well served by a pooled special needs trust. Benefits include:

　　Shared administrative and legal costs, reducing expensesProfessional managementLow or no minimum asset requirementsThe ability to accept contributions from beneficiaries and their loved ones A self-funded pooled special needs trust must include a Medicaid payback provision. The money remaining in the fund upon the beneficiary’s death is used to repay Medicaid for lifetime services rendered.

　　Like individual SNTs, pooled special needs trusts are compatible with other types of trusts and accounts, such as ABLE accounts and trusts not owned by the beneficiary. The professional trustee is responsible for ensuring that disbursements from the trust don’t interfere with the recipient’s ability to receive government benefits.

　　4. Testamentary trustA testamentary trust ensures that your assets are distributed according to your wishes after you die. It’s created through a will and takes effect only upon the death of the person who established it, known as the testator. Before their death, the testator specifies how the trust’s assets should be managed and allocated to the beneficiaries. Testamentary trusts are useful for individuals who want to ensure that their assets are distributed according to their wishes, which may include caring for someone with special needs.

　　No impact on eligibility for government benefits when properly managed Ability to include special needs provisionsFull control over trust assets by the testator during their lifetimeOption to be managed by a professional trustee after the testator’s deathTestamentary trusts can be structured to function like third-party special needs trusts, offering flexibility in meeting the needs of individuals with disabilities. They’re generally compatible with other types of trusts and special needs accounts, but they must go through the probate process after the testator’s death, a step that can add substantial costs and may significantly delay assets being distributed. 

　　5. Revocable living trustIf you want to maintain full control of your assets during your lifetime, while also ensuring care for your loved one after you die, a revocable living trust may be the right choice. A revocable living trust is an account held by a grantor (the person creating the trust), who controls the trust while alive. Upon the grantor’s death, the assets in the trust are managed or distributed according to the terms of the trust, which may include provisions for caring for an individual with special needs.

　　Gives the grantor maximum control over the trust’s terms and assetsCan be customized to suit the beneficiary’s needs and the grantor’s wishesPermits the probate process to be bypassed after the grantor’s deathABLE accounts, special needs trusts, testamentary trusts, and other trust types are compatible with revocable living trusts. Because this type of trust remains part of a grantor’s estate during the grantor’s lifetime, the assets in the trust are considered part of the estate for tax purposes after the grantor’s death.

　　The bottom lineChoosing the right trust or account type is essential to ensure a family member or dependent with disabilities receives proper care, but it’s only part of the planning process. Selecting a trustee, involving other family members, and managing expectations are also vital to creating a long-term care plan that works. Financial planning is only the beginning when creating a compassionate legacy that extends beyond monetary wealth. Although many aspects of financial planning can be accomplished without professional help, given the complexities of special needs estate planning, consulting an estate attorney may be both wise and essential.

　　ReferencesAbout ABLE Accounts | ablenrc.orgSpotlight on ABLE Accounts | ssa.gov