If you care for a loved one living with a disability, thoughtful planning can help ensure long-term support and stability when you can no longer be there for them. This kind of preparation – often referred to as special needs planning – is both an act of care and a critical safeguard for their future. Here are ten considerations that can help you navigate the estate and financial planning process. 

1. Consider unequal inheritance when appropriate

Many families choose to divide assets equally among their children, but that may not always be what’s best for each person’s needs. A loved one with a disability may be in need of lifelong financial support and could benefit from a larger share of your estate. Open conversations about estate planning decisions – especially when one child’s needs are different – can help prevent misunderstandings and foster greater clarity and compassion among other family members.

2. Explore inheritance options that can help preserve benefits

Leaving assets directly to a child with a disability can sometimes affect their eligibility for means-tested programs like Supplemental Security Income (SSI) or Medicaid. Instead of relying on basic trusts or standard inheritance practices, some families work with an attorney to set up a Special Needs Trust (SNT) or an ABLE Account, which can provide supplemental financial support without compromising their access to public benefits.

3. Evaluate trustee options with care

Choosing a trustee for an SNT is an important decision. The trustee typically needs full discretion over distributions to comply with public benefit rules. While a sibling or other family member may seem like a natural fit, you may also want to consider:

• Appointing a professional or institutional trustee
• Naming a trusted family member alongside a trust advisor
• Adding a trust protector who can monitor and, if needed, replace the trustee

Each approach has trade-offs, as these guest experts discuss in more detail. 

4. Review tax and expense allocation plans

Decisions about who pays estate taxes and administrative costs can impact the resources available for a loved one with a disability. Some families work with advisors to clarify how these costs are divided – especially if a Special Needs Trust is involved – so that the trust's value isn’t unintentionally reduced. You can learn more about SNT tax implications and considerations here.

5. Think ahead about your potential health 

If you become unable to manage your affairs, a durable power of attorney can give someone you trust the legal authority to act on your behalf – including potentially petitioning a court to enact financial planning for the benefit of your loved one with a disability. You might consider including provisions that allow your agent to establish or fund a trust for your child. 

6. Revisit beneficiary designations and asset ownership

Even with a well-designed estate plan, certain assets like retirement accounts or life insurance may, by default, bypass a trust and transfer directly to beneficiaries. Reviewing beneficiary designations with an attorney or advisor can help you avoid unintended impacts on your child’s eligibility for public benefits.

7. Consider life insurance as a funding strategy

Some families use second-to-die or survivorship life insurance to fund a Special Needs Trust after both parents pass away. This approach may provide a reliable funding source, but it’s important to coordinate with a planning professional to ensure the policy aligns with your overall goals.

8. Understand the implications of using retirement accounts

Retirement accounts like IRAs often represent a significant portion of a family’s savings – and for some, they may also be part of the legacy they hope to leave for a loved one with a disability. Planning how these assets are passed on can make a meaningful difference in preserving public benefits and ensuring long-term support. But administering inherited IRAs through SNTs is complex. If you’re supporting someone who might inherit retirement assets, consult a planning professional to ensure they know how to maximize the use of inherited IRAs and are aware of how SECURE Act 2.0 updates could impact estate planning decisions. 

9. Coordinate estate plans across the family

Relatives who wish to leave something to your child can unintentionally affect their benefits by naming them as a direct beneficiary. Families sometimes establish a third-party Special Needs Trust to receive gifts, inheritances, and bequests from multiple sources. This can help to simplify planning and preserve benefits access.

10. Plan for care beyond finances  

Special needs planners often recommend creating a Letter of Intent for future caregivers. This non-legal document captures a person’s preferences, history, and support needs – and can be useful for guiding care in your absence. It may include details about your child’s daily routines, interests, support network, and medical needs. This document is intended to help preserve your child’s quality of life and communicate your hopes for their future when you’re no longer around. It can also serve as a guide for your estate planning to make sure you’ve put in place the financial support necessary to implement this care plan.

These planning considerations are only a starting point. Every family’s situation is different, and working with a qualified elder law or special needs planning attorney can help you explore the options that fit your unique goals. 

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The information provided herein is for general informational purposes only and should not be construed as caregiving, financial, investment, tax, or legal advice. Always consult the appropriate advisor for your specific situation.

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