Why a Child With a Disability Needs a Special Needs Trust

Parents of a child with a disability face unique and lifelong planning challenges. Beyond day-to-day care and medical decisions, there is an ongoing concern that never truly goes away: What will happen to my child when I’m no longer here to help? For families whose children rely on Medicaid, Supplemental Security Income (SSI), or other needs-based benefits, this concern is especially urgent.

At Shalloway & Shalloway, P.A., we help families in West Palm Beach and throughout South Florida create Special Needs Trusts that protect essential benefits while providing long-term financial security. A Special Needs Trust is not just an estate planning tool; it is often the foundation of a child’s future care plan.

The Problem With Leaving Assets Directly to a Child With a Disability

Many parents assume they can simply leave money or property to their child through a will or beneficiary designation. Unfortunately, doing so can have serious consequences. Medicaid and SSI impose strict asset limits, typically allowing a beneficiary to own no more than $2,000 in countable resources. Even a modest inheritance can push a child over that limit and cause a loss of benefits.

Losing Medicaid can be devastating. For many children with disabilities, Medicaid is the primary source of medical care, therapy, prescriptions, and long-term support services. Once benefits are lost, families may be forced to spend down the inherited funds on care that Medicaid would otherwise have covered, quickly exhausting the inheritance and leaving the child worse off in the long run.

What Is a Special Needs Trust?

A Special Needs Trust (SNT), also referred to as a Supplemental Needs Trust, is a legal arrangement designed to hold assets for a person with a disability without disqualifying them from needs-based government benefits. Instead of the child owning the assets directly, the trust owns them, and a trustee manages the funds on the child’s behalf.

When properly drafted, the assets in a Special Needs Trust are not counted as available resources for Medicaid or SSI eligibility. This allows the child to continue receiving public benefits while also benefiting from the financial support provided by the trust.

How a Special Needs Trust Improves a Child’s Quality of Life

Government benefits are designed to cover basic needs, not to provide a comfortable or enriched life. A Special Needs Trust fills that gap. Trust funds can be used to pay for goods and services that enhance the child’s well-being but are not covered by Medicaid or SSI.

These may include specialized therapies, educational programs, assistive technology, transportation, travel, recreational activities, and personal support services. By supplementing—not replacing—government benefits, the trust allows parents to provide opportunities and comforts that would otherwise be out of reach.

Third-Party Special Needs Trusts for Parents

For most parents, the appropriate tool is a third-party Special Needs Trust. This type of trust is funded with assets that belong to someone other than the child, typically the parents or grandparents. It can be established during the parents’ lifetime or created as part of a will or revocable living trust.

One of the most important advantages of a third-party Special Needs Trust is that it does not require Medicaid repayment when the child passes away. Any remaining funds can be distributed to other family members or beneficiaries according to the parents’ wishes. This makes it an ideal vehicle for long-term family planning.

Choosing the Right Trustee

Selecting a trustee is one of the most critical decisions parents will make. The trustee is responsible for managing trust assets, making distributions in compliance with Medicaid rules, and advocating for the child’s best interests. Parents may choose a trusted family member, a professional trustee, or a combination of both.

An experienced elder law attorney can help guide this decision and ensure the trustee understands their responsibilities. Poor administration can be just as damaging as poor planning, so proper guidance is essential.

Coordinating a Special Needs Trust With Your Estate Plan

A Special Needs Trust should never exist in isolation. Beneficiary designations on life insurance policies, retirement accounts, and payable-on-death accounts must be coordinated so assets flow into the trust rather than directly to the child. Grandparents and other relatives should also be informed of the trust’s existence to avoid accidental gifts that could jeopardize benefits.

Without this coordination, even a well-drafted trust can fail to protect your child.

Planning for Peace of Mind in West Palm Beach

Creating a Special Needs Trust is one of the most important steps parents of a child with a disability can take. It provides reassurance that your child will continue to receive medical care, financial support, and advocacy long after you are gone.

At Shalloway & Shalloway, P.A., we understand how personal and emotional these decisions are. Our West Palm Beach elder law attorneys work closely with families to design Special Needs Trusts that protect benefits, preserve family resources, and provide long-term stability.

If you have a child with a disability and have not yet created a Special Needs Trust, now is the time to act. Contact Shalloway & Shalloway, P.A., to discuss how we can help you protect your child’s future with thoughtful, effective planning.