For persons who have children with special needs, financial planning should include careful consideration of those needs, especially if it is anticipated that those needs will continue or are continuing into the child’s adulthood. Physical or mental health challenges such as muscular dystrophy, intellectual disability, profound autism, and other conditions can create the need for an adult child to have access to ongoing care, potentially beyond the parents’ ability to provide it.
Fortunately, there are some financial planning tools that parents can use to provide for the care of an adult child with special needs. The most basic, of course, is typically a valid will that provides for the guardianship of the child after the death of the parents. But there are also certain legal structures and even government benefits that can ease the way.
Special Needs Trusts
As we mentioned in a previous article, a trust is a legal tool that can be used to set aside assets for specific purposes and direct how and when the assets are to be distributed, even beyond the death of the trust’s creator (the grantor).
A special needs trust (SNT) is a specific type of trust designed to provide for individuals who may not be able to provide for themselves. Unlike other types of trusts, assets in a special needs trust are not counted against the threshold to qualify for government benefits like Medicaid and supplemental security income (SSI). Because the assets in a properly designed SNT are not controlled by or directly accessible to the beneficiary, they may still be disbursed by the trustee for the beneficiary’s use to enhance quality of life (such as for education, recreation, or medical expenses not covered by Medicaid) without impairing the ability of the beneficiary to access government benefits for disabled or medically impaired persons. To set up a special needs trust, consult with your financial planner and a qualified estate planning professional.
ABLE Accounts
This tax-advantaged savings account for persons with disabilities with onset prior to age 46 was created in 2014 to provide funds that can be accessed without counting as taxable income to the disabled individual. ABLE accounts can hold up to $100,000 without counting as a resource for the purposes of SSI eligibility. In 2026, up to $20,000 in after-tax funds may be deposited to an ABLE account, and the growth within the account is not taxed.
Important Considerations
As mentioned above, a person who owns as little as $2,000 in assets is typically disqualified from receiving aid from government programs like Medicaid or SSI. Thus, it is vital to consider the form of ownership of any assets intended to provide for the disabled person. To maximize the opportunity of taking advantage of these programs, having the assets in a SNT, an ABLE account, or both, is an important strategy to consider.
In this connection, don’t forget about life insurance proceeds, ownership of retirement accounts, inheritances, or other disbursements that might be payable in the future. Designating the SNT as beneficiary may be a way to avoid having the death benefit push the disable person over the asset threshold.
Mathis Wealth Management, as a fiduciary financial and wealth advisor, works with clients to find solutions to their unique financial planning needs, including providing care for adult children with special needs. If you have questions about such a need or any other important financial matter, we are here to help and advise.
