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Special Needs Trust
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How trusts and ABLE accounts protect SSI and Medicaid eligibility — without losing benefits.

Built by Dr. Ed Weir, former SSA District Manager
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What brings you here today?

Pick the one that best describes your situation. We'll guide you through everything you need to know.

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Special Needs Trusts & ABLE (Achieving a Better Life Experience) Accounts — The Basics

Two powerful tools designed to let someone with a disability have assets without losing critical government benefits.

What is a Special Needs Trust?

A Special Needs Trust (SNT) is a legal document that holds money for someone with a disability, but the money doesn't belong directly to them. This is the key: because the person doesn't own the money, it doesn't count as their "resource" for SSI (Supplemental Security Income) and Medicaid purposes.

What is an ABLE Account?

An ABLE account is a special savings account for people with disabilities, established after December 31, 2014. The first $100,000 in an ABLE account is disregarded for SSI purposes — meaning it doesn't count against the $2,000 SSI resource limit. Medicaid isn't affected at all by ABLE account balances.

Key 2026 Limits: SSI federal rate is $994/month. The SSI resource limit remains $2,000 (individual) / $3,000 (couple). You can contribute up to $20,000/year to an ABLE account (2026 annual gift tax exclusion).

Three types of Special Needs Trusts:

Type Who funds it Best for
First-Party SNT The person themselves (their own assets) Settlements, inheritances received BY the disabled person
Third-Party SNT Family, friends, or others Parents/grandparents wanting to leave money for care
Pooled Trust Either first or third-party funds Anyone over age 65, or when non-profit management is preferred
Insider Tip from Dr. Ed
Many people benefit from combining an ABLE account with an SNT. Use the ABLE account for day-to-day expenses (groceries, clothing, copays). Use the SNT for larger purchases, one-time needs, and long-term planning. This gives you flexibility while protecting benefits both ways.
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Estate Planning

Planning an Inheritance for Someone with a Disability

If you give money directly, you could unintentionally cost them their SSI (Supplemental Security Income) and Medicaid. A trust solves this completely.

⚠️ Critical issue: If someone on SSI receives more than $2,000 in resources, they immediately lose benefits. Not suspend — lose, until the excess is gone. A trust prevents this.

The best tool: Third-Party Special Needs Trust

This is funded with your money (not theirs). When you die, the trust holds the funds and a trustee manages them for the beneficiary's needs — without the money being "theirs" for SSI/Medicaid purposes.

  • 1

    Consult a Special Needs Planning Attorney

    This is essential. Look for attorneys who specialize in disabilities law or special needs planning. They'll draft a trust that complies with federal law.

  • 2

    Choose and name a trustee

    The trustee can be a family member, friend, professional fiduciary, or bank. Consider someone responsible who understands the beneficiary's needs and will outlive you (or name a successor).

  • 3

    Update your will to fund the trust

    Your will should direct your estate to the SNT (Special Needs Trust) when you pass. You can also fund it during life if you choose.

  • 4

    Write a Letter of Intent (optional but recommended)

    This is not legally binding, but it guides the trustee. Describe the beneficiary's needs, preferences, medical conditions, education goals, favorite activities, and your wishes for the funds.

Insider Tip from Dr. Ed
Professional trustees cost money but provide peace of mind. A family member may be more affordable, but if they pass away or have disputes with other family members, the trust can fall apart. A corporate trustee (bank or trust company) stays stable. Consider hybrid: family member + corporate successor.
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Settlement Planning

Protecting a Settlement or Legal Award

If someone with a disability receives a settlement from a lawsuit or court award, placing it in a trust preserves their SSI (Supplemental Security Income) and Medicaid eligibility.

⏰ Act FAST: If the settlement goes directly to the person, they immediately lose SSI/Medicaid when the funds exceed the $2,000 limit. You may have days to act before the check clears.

Why a First-Party SNT (Special Needs Trust)?

If the settlement is the disabled person's own money (from their injury, their case), it's called a "First-Party" SNT under 42 U.S.C. § 1396p(d)(4)(A). This is specifically allowed by federal law.

Important requirement: In a first-party SNT, the state must be named as the primary beneficiary to receive reimbursement for Medicaid services when the person dies. This is non-negotiable for federal compliance.

What can the trustee do with the money?

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Pay for supplemental care — therapy, counseling, personal care attendant services above what Medicaid covers
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Buy equipment and technology — wheelchair, computer, hearing aids, mobility devices
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Pay for education and training — college, vocational programs, job coaching
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Fund recreational and social activities — travel, hobbies, social engagement, community participation
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Pay for housing improvements — rent deposit, accessible modifications, furnishings
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NOT direct cash to the beneficiary — any money given directly to the person counts against SSI resources immediately
Insider Tip from Dr. Ed
Timing matters hugely. Work with your settlement attorney before the check is issued to structure it directly into a court-approved SNT. If the check goes to the person first, you'll have to do more paperwork to move the money. Some judges will delay settlement fund disbursement to allow trust setup. Ask your attorney.
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Resource Limits

Protecting Savings Above the $2,000 Limit

If you're on SSI (Supplemental Security Income), you can only have $2,000 in resources ($3,000 for a couple). Excess savings triggers benefit loss. A trust or ABLE (Achieving a Better Life Experience) account solves this.

2026 Facts: SSI federal rate is $994/month (couple: $1,491). The $2,000 resource limit has not changed since 1989 — but your savings can grow. Protect it properly.

Your two best options:

Option A: ABLE Account

Best if: You want to manage the money yourself and keep it accessible. The first $100,000 is fully disregarded for SSI. You can withdraw and use the money as needed.

Pros: You control it. ABLE accounts have investment options. Easy withdrawals. No trustee needed.

Cons: Only works if you're disabled before age 26. If balance exceeds $100,000, SSI is suspended (but not Medicaid or the account itself).

Option B: Pooled Trust

Best if: You're over 26, or want money managed by a professional, or need unlimited protection (ABLE has a cap). All your excess savings move into a professional trust account.

Pros: Works at any age. Unlimited amounts protected. Professional management. Medicaid payback provisions exist but are less restrictive than first-party SNTs.

Cons: Requires trustee (usually non-profit). Less control over spending. Costs and fees involved.

ABLE vs. Pooled Trust Comparison:

Criteria ABLE Account Pooled Trust
Age requirement Disabled before age 26 Any age
Amount protected First $100,000 disregarded (SSI only) Unlimited amounts protected
Who controls it You (the account holder) Professional trustee
Medicaid impact No impact (any balance OK) No impact (any balance OK)
2026 annual contribution limit $20,000/year (gift tax exclusion) No annual limit
Insider Tip from Dr. Ed
Many people use BOTH: If you're under 26 with disability, open an ABLE account immediately. Put up to $20,000/year in it. Once you exceed $100,000 or turn 26, move excess to a pooled trust. You get the best of both: accessibility now, professional management later.
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ABLE (Achieving a Better Life Experience) Account Setup

How to Open an ABLE Account — Step by Step

Eligibility: You must have a disability that began before age 26 and be receiving SSI (Supplemental Security Income), SSDI (Social Security Disability Insurance), or have a condition on SSA's compassionate allowances list. Age 26+ people can still open if onset was before 26.
  • 1

    Verify you're eligible

    You need a Social Security Number and proof of disability onset before age 26. Call 1-888-540-ABLE or visit ablenrc.org to check requirements.

  • 2

    Choose an ABLE account provider

    Multiple banks and financial institutions offer ABLE accounts. Compare fees, investment options, and ease of use at ablenrc.org. Popular options include Fidelity, Legg Mason, and state-specific programs.

  • 3

    Open the account online or in person

    Most providers let you open online. You'll need your SSN, proof of disability, and bank information to fund it initially.

  • 4

    Fund your account strategically

    You can contribute up to $20,000/year (2026 gift tax exclusion). Family and friends can also contribute on your behalf.

  • 5

    Report it to SSA

    Tell Social Security you have an ABLE account. They'll disregard the first $100,000 when calculating your SSI benefit. Send them proof of the account opening.

2026 ABLE Account Facts:

Annual contribution limit $20,000
Amount disregarded for SSI $100,000
When balance exceeds $100k SSI suspended (not terminated)
Impact on Medicaid No impact at any balance
Insider Tip from Dr. Ed
Don't panic if your ABLE hits $100k+. Your SSI is suspended, not terminated. The moment your balance drops below $100k, SSI restarts automatically. This is actually useful: park money here when you're working, let it grow, then use it down when you need it. SSI returns when you need it.
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Smart Spending

What Can You Use ABLE (Achieving a Better Life Experience) Account Money For?

ABLE accounts have broad allowed uses under federal tax law. Here's what works:

✓ Qualified Disability Expenses — All allowed:

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Education — tuition, fees, books, room & board, computers, assistive technology
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Employment — job training, equipment, transportation to work, work-related assistive technology
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Housing — rent, mortgage, property taxes, utilities, home modifications for accessibility, furniture, appliances
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Transportation — vehicle purchase, gas, insurance, maintenance, public transit, medical transportation
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Medical and dental — insurance premiums (including Medicare Part B: $202.90/mo in 2026), copays, deductibles, prescriptions, medical equipment, therapy
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Assistive technology and services — wheelchairs, hearing aids, computers, software, personal care attendants
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Health and wellness — gym memberships, fitness classes, counseling, therapy, nutritional support
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Recreational and social activities — sports, hobbies, travel, entertainment, community participation, social clubs
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Financial management and oversight — legal fees, tax prep, financial advisor fees related to the account
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Basic living expenses — food, clothing, personal care items (soap, toiletries), household items
Key rule: Expenses must be related to your disability or be basic living expenses. Keep receipts and be ready to explain to SSA if questioned.
Insider Tip from Dr. Ed
ABLE + SNT (Special Needs Trust) strategy: Use ABLE for frequent, predictable expenses — groceries, medication, utilities. Use the SNT for big-ticket items — vehicle, computer, vacation. This spreads your resources smartly and gives you flexibility without triggering benefit loss.
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Legal Process

Establishing a Special Needs Trust — The Process

Setting up an SNT (Special Needs Trust) requires careful legal work. This is not something to DIY — the rules are complex and errors can cost benefits.

⚠️ Critical: A poorly drafted trust can be invalid and unenforceable. You could lose the entire benefit protection. This is one area where hiring a professional attorney is absolutely necessary.
  • 1

    Find a Special Needs Planning Attorney

    Look for attorneys certified in elder law (CELA), disability law, or special needs planning. Call the National Academy of Special Needs Planners or your state bar association. Ask if they have experience with SSI (Supplemental Security Income) and Medicaid law.

  • 2

    Initial consultation (often free or $200–$500)

    Bring: beneficiary's SSN, current benefit verification, details of assets/settlement, and family information. The attorney will assess which trust type fits your situation.

  • 3

    Draft the trust document

    The attorney drafts a trust agreement that complies with federal law (42 U.S.C. § 1396p). For first-party SNTs, the state Medicaid agency must be named as beneficiary. For third-party SNTs, family and successors are named.

  • 5

    Execute (sign) the trust

    You'll sign the document, typically with witnesses and notarization. Keep the original in a safe place and copies at home.

  • 6

    Fund the trust

    Once signed, the trust needs assets. You can transfer money, property, or insurance proceeds into it. The attorney can help with transfer documents.

  • 7

    Report to SSA

    Send SSA a copy of the executed trust and inform them. They may ask for details but should accept a properly drafted trust without contesting benefits.

Typical Timeline & Costs:

Consultation 1–2 hours
Attorney drafting time 3–5 hours (5–10 days)
Total time to completion 2–4 weeks typical
Attorney fees (simple SNT) $1,500–$3,500
Attorney fees (complex estate) $3,500–$7,000+

Important deadline for First-Party SNTs:

A first-party SNT must be established before the beneficiary turns 65 (federal law requirement). After age 65, a pooled trust is often the only option. Don't delay if you have a first-party situation.

Insider Tip from Dr. Ed
This is an investment, not an expense. A $2,000 trust protects potentially $50,000+ in assets. You're paying for expertise that prevents catastrophic benefit loss. The cost is well worth it. Many attorneys offer payment plans.
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Critical Decision

Who Should Be the Trustee?

The trustee has enormous responsibility. They'll make spending decisions that affect the beneficiary's life and benefits. Choose carefully.

Option 1: Family Member or Friend

Usually a parent, sibling, or trusted adult who knows the beneficiary well.

✓ Advantages: Personal knowledge of beneficiary. Often free or low-cost. Understands family dynamics and values.

✗ Disadvantages: May not live long enough (need successor). Possible conflicts with other family members. May not understand SSI (Supplemental Security Income)/Medicaid rules. Emotions may cloud decisions.

Option 2: Professional Trustee (Corporate/Bank)

A bank, trust company, or professional fiduciary licensed in your state.