Special Needs Planning
SSI and Medicaid are means-tested programs: eligibility depends on staying under strict asset and income limits, often just a few thousand dollars in countable resources. A well-intentioned inheritance, a personal injury settlement, or even a modest gift left directly to a person with a disability can push them over that limit and suspend the very benefits they rely on for housing, medical care, and daily support — sometimes within days of the money arriving. A special needs trust is built specifically to close that gap.
A special needs trust (sometimes called a supplemental needs trust) holds assets for the benefit of a person with a disability without those assets being counted as belonging to that person for benefits-eligibility purposes. The trustee — not the beneficiary — controls the assets and makes distributions, which is precisely the legal distinction that keeps the trust’s assets from disqualifying the beneficiary from SSI or Medicaid.
SPECIAL NEEDS TRUSTS
SPECIAL NEEDS TRUST DISTRIBUTIONS
A properly administered special needs trust can pay for what benefits programs don't cover: specialized therapies, adaptive equipment, education, recreation, travel, and personal care beyond what a benefits program provides.
What it generally cannot pay for, without affecting eligibility, is direct cash to the beneficiary or unrestricted payment of basic food and shelter costs that SSI is specifically designed to cover — a nuance that trips up even well-meaning family trustees who aren't familiar with the rules, and one reason professional or carefully advised trustee selection matters.
ADVANCE PLANNING
TRUSTEE SELECTION
You can, but doing so risks disqualifying them from SSI or Medicaid the moment the inheritance arrives. A third-party special needs trust, established as part of your own estate plan, avoids that risk entirely.
For a third-party special needs trust, remaining assets pass to whomever you named as successor beneficiaries — no payback to Medicaid is required. For a first-party trust, Medicaid must generally be reimbursed first from remaining assets.
Someone who understands SSI and Medicaid rules in detail and will make distribution decisions carefully — a family member, a professional trustee, or both working together, depending on the complexity of your situation.
It can, along with therapies, adaptive equipment, education, and quality-of-life expenses beyond what government programs provide — within the rules governing what the trust can pay for without affecting eligibility.
A WORD ON DIY WILLS
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