Planning for a Loved One with Special Needs

June 3, 2025

Caring for a family member with special needs can be very demanding. Daily tasks can take up so much time that long-term planning is often forgotten. But while today’s challenges may feel overwhelming, the journey of care is usually a lifelong one.

Taking time to think about your family’s future can bring peace of mind and security. This includes financial, legal, and practical aspects.

One helpful approach is to think in stages, focusing on the evolving needs of your loved one over time.

Step One: Building a Foundation of Understanding

The starting point for long-term care planning is gaining clarity around what support your loved one will need—now and in the future. A useful tool to begin this process is creating a letter of intent.

While this isn’t a legally binding document, it serves as a valuable roadmap for future caregivers. It provides insight into daily routines, medical care, personal preferences, and long-term goals. Think of it as a living guidebook for those who may step into a caregiving role one day.

As this document evolves, it can highlight gaps in resources or support. Will your home need modifications to accommodate mobility needs? Will one parent or partner reduce work hours to provide care? These considerations can help frame your financial and lifestyle planning.

Step Two: Financial Planning and Resource Management

If you think your family member will need care as an adult, it's time to focus on financial planning. The severity and nature of their disability—and your family’s financial landscape—will shape your approach.

One option to consider is the ABLE account. This account was created by the Achieving a Better Life Experience Act of 2014. These special savings accounts help people with qualifying disabilities save money. They can do this without losing access to need-based government programs like Medicaid or Supplemental Security Income (SSI).

ABLE accounts have multiple advantages:

●      After-tax contributions grow tax-deferred.

●      Withdrawals used for qualified disability-related expenses (like housing, transportation, education, and health care) are income tax-free.

●      Assets in the account do not count toward the usual $2,000 SSI asset limit. However, benefits may be affected if the account balance goes over $100,000.

In 2025, total contributions from all sources are capped at $19,000. The ABLE to Work provision lets account owners who have jobs contribute more. They can contribute up to the federal poverty line for a one-person household, which is $15,650 in 2025. There are higher limits for Alaska and Hawaii.

Starting in 2026, people whose disability began before age 46 can open an ABLE account. This change comes from the SECURE 2.0 Act.

Because ABLE accounts aren't suitable for every situation, it's wise to consult a financial advisor before proceeding.

Step Three: Thinking Ahead—Legal and Estate Considerations

One key part of planning for a loved one with special needs is ensuring they have financial support. This is important for when you can no longer care for them.

This often means avoiding common mistakes. For example, do not name your loved one directly as a beneficiary of retirement accounts or life insurance policies. Doing so could unintentionally disqualify them from essential government benefits.

Instead, many families create a special needs trust. The most common type is a third-party special needs trust.

This trust is funded by someone other than the beneficiary, like a parent or grandparent. It lets funds be used for the person with special needs. This does not change their eligibility for public programs.

These trusts need careful planning. A trustee manages them and gives money for approved expenses. The beneficiary does not have direct access to the funds.

Another option is a first-party special needs trust. This trust is used when a person with disabilities gets assets directly. This can happen through an inheritance or a legal settlement. These trusts help protect access to benefits, but any remaining funds at the time of the beneficiary’s death may need to be used to reimburse Medicaid.

A pooled trust, often managed by nonprofit organizations, combines assets from multiple individuals with special needs. This type can be a more cost-effective option, especially for those with smaller estates.

To explore pooled trust providers, the Academy of Special Needs Planners is a good place to start.

Final Thoughts: Stay Flexible and Keep Reviewing

Planning for a loved one with special needs is never a one-time task. Your family’s situation will evolve—sometimes unexpectedly. That's why it's important to review your plan every three to five years. You should also do this when a big life change happens, like moving, changing jobs, or getting a new diagnosis.

By being proactive and caring, you can help make sure your loved one is supported and safe for years. This is true even after you are no longer there to speak up for them.

Sources:

https://www.fidelity.com/viewpoints/wealth-management/estate-planning-for-special-needs

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.