Special needs trusts bring peace of mind to aging parents of children with disabilities

Linda Tung, 75, has been planning for her daughter Rachel’s future for decades. Rachel, 36, has cerebral palsy and relies on public benefits, which could be jeopardized if she were to inherit assets outright. To prevent this, the family set up a SNT in 1997, which ensures Rachel will inherit her share of their home without losing access to crucial benefits.

The need for SNTs is growing as life expectancy for individuals with disabilities has increased, while the public support system has not kept up. Many parents, like Tung, face the dual challenge of aging while ensuring their disabled children are cared for when they are gone. Special needs trusts are designed to protect a beneficiary’s assets while maintaining their eligibility for government programs such as Supplemental Security Income and Medicaid, which have strict resource limits.

Attorneys specializing in disability planning stress the importance of selecting the right trustee to manage the trust. Some families choose professional fiduciaries, while others appoint a family member. However, this can create tension, as the trustee must manage finances, and conflicts over money are common. Pooled trusts, managed by nonprofit organizations, are becoming a popular option, offering lower costs and a team of professionals to handle trust management and care coordination.

Additionally, ABLE accounts, introduced in 2014, allow individuals with disabilities to save up to $100,000 without affecting their public benefits. These accounts provide more flexibility for everyday expenses and can be combined with SNTs to maximize financial security. For families like the Tungs, setting up these plans is crucial to ensuring their children’s well-being and independence in the future, long after they are gone.

For more information see Hannah Frances Johansson, "Special needs trusts bring peace of mind to aging parents of children with disabilities," CNN.com, September 13, 2024. 

Special thanks to Naomi Cahn (University of Virginia School of Law) for bringing this article to my attention.