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Home » Resources » Frequently asked questions » Special Needs Planning

Special Needs Planning

      • Many individuals with disabilities rely on Supplemental Security Income (SSI) and Medicaid for healthcare and financial support. These programs have strict income and asset limits. If a person with special needs inherits money outright, they could lose their benefits. Special needs planning allows you to provide for them without disrupting their eligibility.

      • A special needs trust holds money or property for a person with a disability without counting toward their asset limits for government benefits. The trustee manages the funds and uses them for expenses that enhance quality of life, such as education, medical care, therapy, and recreation.

      • Yes. The two most common are:

        • First-Party Trust: Funded with assets belonging to the person with special needs, such as an inheritance or lawsuit settlement. Federal law requires that any remaining funds be used to reimburse Medicaid after the beneficiary’s passing.
        • Third-Party Trust: Created by a parent, grandparent, or other loved one using their own assets. Because the funds never belonged to the beneficiary, Medicaid does not require repayment after their death.

      • It is not recommended. If they have more than $2,000 in assets, they may lose SSI and Medicaid benefits. Instead, placing the inheritance in a special needs trust ensures they receive financial support without disqualifying them from essential programs.

      • A special needs trust can cover expenses that improve the beneficiary’s quality of life, including:

        • Medical and dental care not covered by Medicaid
        • Education and job training
        • Assistive technology and specialized therapy
        • Travel, entertainment, and hobbies
        • Transportation, including a vehicle purchase
        Funds cannot be used for food, housing, or direct cash distributions, as these could affect benefits.

      • A trustee manages the trust assets and ensures they are used correctly. Options include:

        • A family member who understands the beneficiary’s needs
        • A professional trustee or corporate trustee, such as a bank or financial institution
        • A nonprofit organization that administers pooled special needs trusts
        Choosing the right trustee is crucial because they will make financial decisions on behalf of your loved one.

      • A pooled trust is managed by a nonprofit organization and combines assets from multiple beneficiaries for investment purposes. Each person has a separate account, but funds are professionally managed to benefit all participants. This option is ideal for families who do not have a trusted individual to serve as trustee or for smaller inheritances.

      • An ABLE account allows individuals with disabilities to save money without losing benefits. In Oklahoma, these accounts can hold up to $100,000 without affecting SSI and can be used for housing, food, education, and healthcare. Unlike a special needs trust, an ABLE account allows the beneficiary to have more direct control over funds. Many families use both tools together for greater financial flexibility.

      • Many parents use life insurance to fund a special needs trust. Instead of leaving an inheritance directly to a child, naming the trust as the beneficiary ensures that funds are managed properly. This approach guarantees financial support without jeopardizing benefits.

      • Without a special needs trust or ABLE account, any inheritance or financial gift could disqualify your loved one from Medicaid, SSI, and other government benefits. Additionally, without a legal plan, the courts may decide who will manage their finances and personal care, which may not align with your wishes.

Take action today!

We can help you provide for all of your loved ones in an ideal manner, and you can get started by calling our Oklahoma City estate planning office at 405-843-6100. Our Tulsa location can be reached at 918-615-2700, and you can use our contact form to send us a message.