Providing for them without costing them their benefits.

The resource limit is the whole problem

Supplemental Security Income limits countable resources to $2,000 for an individual and $3,000 for a couple, limits that have not been raised since 1989.¹ Medicaid eligibility in many categories is tied to the same test. An inheritance, a settlement, or a grandparent’s well-meaning gift can push someone over that line and interrupt both the income and, far more importantly, the medical coverage.

Losing SSI eligibility is inconvenient. Losing the Medicaid coverage that comes with it, including long-term services and supports that private insurance generally does not cover, is the real exposure.

Special needs trusts

A properly drafted special needs trust holds assets for the beneficiary’s supplemental needs without those assets counting as the beneficiary’s own resources. Two kinds do different jobs:

• Third-party trust. Funded with someone else’s assets: parents, grandparents, life insurance. Because it was never the beneficiary’s money, there is no Medicaid payback requirement, and remaining assets can pass to other family members. This is where a family’s inheritance and life insurance should generally be directed.
• First-party trust. Funded with the beneficiary’s own assets: a settlement, an inheritance received outright, back benefits. Established under 42 U.S.C. §1396p(d)(4)(A), it must generally repay Medicaid from what remains at the beneficiary’s death.

Drafting is legal work and it is specialized. So is naming a trustee who will still be capable in thirty years, which is why a corporate or co-trustee arrangement is worth considering.

ABLE accounts

ABLE accounts complement a trust rather than replacing it. Contributions were limited to $19,000 for 2025, earnings grow tax-deferred, and qualified disability expenses come out tax-free.² Critically, balances up to $100,000 are generally excluded from the SSI resource test, and ABLE assets are generally disregarded for Medicaid.

Beginning January 1, 2026, the ABLE Age Adjustment Act raises the age of disability onset for eligibility from 26 to 46, which makes a large number of people newly eligible.³ ABLE gives the beneficiary direct access to money for day-to-day expenses in a way a trust deliberately does not.

Funding, and the mistake to avoid

The most common and most damaging error is leaving assets directly to the family member with a disability or to a sibling with an informal understanding that they will “take care of” them. The first disqualifies benefits. The second exposes the money to the sibling’s divorce, creditors and mortality, with no enforceable obligation behind it.

Second-to-die life insurance payable to a third-party special needs trust is frequently the most efficient way to fund a lifetime of care, because the need arises when both parents are gone. That has to be coordinated with the estate documents and with every beneficiary designation in the household, including retirement accounts.

The letter of intent

Not a legal document, and arguably the most important one in the file. It records what the next caregiver cannot learn from a trust: routines, medical history and providers, what soothes and what distresses, who the friends are, what a good day looks like. Families with a disabled loved one plan longer horizons than anyone else and this is the piece that carries the knowledge across.

For context on scale: CDC surveillance now identifies about 1 in 31 eight-year-old children with autism spectrum disorder.⁴ A very large number of families need this planning and do not know the tools exist.