The Core Problem: Leaving Assets to a Disabled Child

Many government benefit programs — including Medicaid and Supplemental Security Income (SSI) — have strict asset limits. A person receiving SSI, for example, generally cannot have more than $2,000 in countable assets. If a disabled child inherits money or property directly — through a will, a beneficiary designation, or intestate succession — that inheritance can push them over the asset limit and disqualify them from benefits they depend on. The solution is a Special Needs Trust (also called a Supplemental Needs Trust). Assets held in a properly drafted Special Needs Trust are not counted as the beneficiary's assets for purposes of government benefit eligibility. The trust can pay for goods and services that supplement — but do not replace — what government programs provide.

What a Special Needs Trust Can Pay For

A Special Needs Trust can pay for a wide range of goods and services that improve the beneficiary's quality of life without replacing government benefits. Examples include: - Education, job training, and vocational rehabilitation - Transportation (including a vehicle) - Technology (computers, tablets, communication devices) - Recreation, travel, and entertainment - Personal care items not covered by Medicaid - Dental and vision care not covered by Medicaid - Legal fees - Funeral and burial expenses The trust cannot pay for food or shelter in a way that would reduce SSI benefits, and distributions must be carefully managed to avoid unintended consequences. A knowledgeable Trustee — or a professional trustee — is essential.

Types of Special Needs Trusts

There are two main types of Special Needs Trusts relevant to estate planning: 1. Third-Party Special Needs Trust — funded with assets belonging to someone other than the disabled person (typically parents or grandparents). This is the most common type used in estate planning. There is no Medicaid payback requirement at the beneficiary's death — remaining assets can pass to other family members. 2. First-Party (Self-Settled) Special Needs Trust — funded with assets belonging to the disabled person (such as a personal injury settlement). These trusts have a Medicaid payback requirement at the beneficiary's death. For estate planning purposes, Christopher typically drafts Third-Party Special Needs Trusts as a Stand-Alone Special Needs Trust for $500 payable via Zelle.

Integrating Special Needs Planning into the Family Estate Plan

Special needs planning does not exist in isolation — it must be integrated into the family's overall estate plan. This means: - Updating beneficiary designations on retirement accounts and life insurance to name the Special Needs Trust (not the disabled child directly) - Coordinating with siblings and other family members who may also want to leave assets for the disabled child - Drafting a Letter of Intent that documents the child's daily routine, medical needs, preferences, and care wishes — a roadmap for the Trustee - Planning for the possibility that the disabled child may outlive the parents Christopher takes a holistic approach to special needs planning, ensuring that every piece of the estate plan works together to protect the disabled child.

ABLE Accounts

Washington State participates in the ABLE (Achieving a Better Life Experience) program, which allows individuals with disabilities to open tax-advantaged savings accounts. ABLE accounts can hold up to $100,000 without affecting SSI eligibility (amounts above $100,000 are counted as assets). ABLE accounts can be used for qualified disability expenses, including education, housing, transportation, and health care. They are a useful complement to a Special Needs Trust — not a replacement for one. Christopher can discuss whether an ABLE account makes sense as part of your child's overall financial and estate plan.

Choosing a Trustee

Choosing the right Trustee for a Special Needs Trust is one of the most important decisions a parent can make. The Trustee will manage the trust assets, make distribution decisions, and interact with government benefit agencies — potentially for decades. Options include: - A trusted family member (sibling, aunt, uncle) — personal knowledge of the beneficiary, but may lack financial or legal expertise - A professional trustee (bank trust department, private professional trustee) — expertise and continuity, but may lack personal knowledge of the beneficiary - A co-trustee arrangement — combines personal knowledge with professional expertise Christopher will discuss the pros and cons of each option and help you make the right choice for your family.