Financial Assistance for Families With Special Needs Children (ABLE Act)

Financial Assistance For Families With Special Needs Children And Other Family Members (ABLE Act)

Special needs trusts can provide financial assistance for families with special needs children to overcome common financial barriers.

Families of disabled individuals face unique financial challenges, especially if the individual receives public assistance.

A special needs trust enhances a disabled individual’s quality of life and allows the individual to receive needs-based government benefits, such as Medicaid and Supplemental Security Income (SSI). Here’s an overview of the two types of special needs trusts, how they differ, and what they can provide.


A first-party Special Needs Trust is funded with assets owned outright by a disabled beneficiary that may be received from an inheritance, personal injury settlement or a medical malpractice settlement. This type of Special Needs Trust must include a provision that any assets remaining at the beneficiary’s death are first to be used to pay the state Medicaid agency for benefits received. A third-party Special Needs Trust, also referred to as a Supplemental Needs Trust, is funded with assets that belonged to someone other than the disabled individual. The trust grantor, or creator, of a third-party Special Needs Trust, can direct how the assets are distributed after the disabled beneficiary’s death. Special and Supplemental Needs Trusts (collectively SNTs) differ from other trusts in that they supplement benefits already provided by government programs. The assets in the SNT are not considered an available asset when qualifying for government benefits.

A SNT must name either an individual person or a professional fiduciary, such as Trust Point, as the trustee. SNTs are governed by complex rules and laws. It is critical that the trustee be familiar with fiduciary duties, public benefits laws, investment standards, and trust accounting before accepting a trusteeship. A trustee’s improper administration of a SNT might jeopardize the beneficiary’s eligibility for government benefits.

SNTs are designed to supplement, and not replace, the support provided by public benefits. Qualification for public benefits, such as SSI and Medicaid, depends on the beneficiary’s income and assets. Therefore, improper trust distributions will be considered income to the beneficiary and benefits may be denied.

The trustee has the discretion to make distributions for expenses that promote the beneficiary’s independence, such as higher quality medical equipment, dental care, therapy, nursing or in-home care or a private room in a care center, home furnishings, education, vehicles, trips and recreational items that cannot be obtained through public benefits. The trust might also pay for a home modification or the purchase of a specially adapted residence. The trust also pays for trustee fees, legal expenses, and taxes.

The trustee makes recurring and one-time distributions directly to third-party vendors for expenses and services. The trustee cannot make distributions directly to the beneficiary, as doing so might attribute unearned income to the beneficiary and affect needs-based benefits.

A professional fiduciary with SNT administration experience is often the best choice as a trustee. Professional trustees help to ensure proper administration and distributions, preserving eligibility for benefits and allowing the family to focus on the care and support of the disabled individual rather than administrative tasks.


For beneficiaries who live semi-independently, there is often a request to receive funds directly from the trust to make independent purchases. The Social Security Administration now recognizes and allows a SNT beneficiary to use an administrator-managed prepaid card, such as a True Link™ card. The True Link card gives the beneficiary access to trust funds based on restrictions set by the trustee.

The SNT trustee can customize a True Link card to block access to cash, restrict certain purchases, and control where the card can be used. Because the trustee is the owner of the card account, qualified disbursements are not considered unearned income to the beneficiary, again preserving the beneficiary’s eligibility for public benefits.

The trustee can activate the card, transfer, disburse, and monitor funds online. The trustee can prohibit the use of the card for ATM and bank withdrawals, as well as cash back at merchants. The trustee can also set restrictions so the card cannot be used for food or shelter, but can be used for gas, clothes, and pharmaceutical purchases that are not paid by government benefits. The trustee has the power to limit the type of business or location where the card can be used and to set transaction limits by spending categories or particular retailers.

Special needs trust: Set up an ABLE plan.The True Link card is customized to each beneficiary’s specific needs. The beneficiary can achieve a sense of independence by making purchases as needed and will have quicker access to funds. After an email or phone call request from a beneficiary, the trustee can add funds to the card online and, within minutes, the beneficiary can use it at the approved vendor location.


Means-tested public benefits, such as Medicaid and SSI, require maximum asset limits to determine eligibility.

If you’re looking for a great provide financial assistance for families with special needs children, able accounts are an excellent option.

The maximum asset limit for many single disabled individuals to receive Medicaid benefits is $3,000 in Minnesota but $2,000 in Wisconsin and the limit for SSI is $2,000. (Medicaid is a federal benefit but each state administers the program with slightly different rules.) Therefore, the total amount of assets an individual can have must be below those limits to qualify for the benefit. Disabled and special needs individuals who are able to work and earn income often find it difficult to sustain meaningful employment because of these low asset limits. A federal law enacted in 2014 now allows disabled individuals to create and contribute to a tax-advantaged savings account.

The ABLE (Achieving a Better Life Experience) Act of 2014 gives disabled individuals the opportunity to create and own an ABLE account. To be eligible for an ABLE account, the beneficiary must meet the Social Security Administration’s definition of “disabled” before the age of 26. The account beneficiary is the owner and the account growth is not subject to income tax. An ABLE account can be used for any expenses incurred related to living with a disability and expenses intended to improve the individual’s quality of life. Funds remaining in the ABLE account at death are first used to pay back a claim to the state for Medicaid benefits provided.

Funds in the ABLE account up to $100,000 are excluded from the SSI resource limit to qualify for these benefits. The ABLE account balance is not an asset for determining Medicaid eligibility. An employed ABLE account owner can contribute earnings to the account and still remain under the asset limits required by Medicaid and SSI. Unlike a SNT, the total annual contribution limit to each ABLE account is $15,000 for 2019.

As a professional trustee, Trust Point works together with attorneys who are experienced in estate planning and Medicaid planning to provide you the peace of mind knowing your loved ones are taken care of.

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