If a family member with a disability receives money from an inheritance, a settlement, or a gift, that money counts against the strict asset limits for Medicaid and Supplemental Security Income (SSI).
A special needs trust holds those funds separately from the beneficiary's own assets, so their eligibility stays intact and the money can still be used for the things public benefits don't cover.
We understand how much is riding on getting this right for your loved one. Setting up the trust correctly protects the benefits your family member depends on today, while still giving them access to a better quality of life.
Keeping Medicaid and SSI Benefits Safe
A special needs trust separates the money from the beneficiary's name, so eligibility stays protected.
Without a special needs trust
Money paid directly to your family member counts as an asset. That can end their Medicaid or SSI eligibility right when they need it most.
With a special needs trust
The same money sits inside the trust instead of in their name. Benefits stay in place, and the trust still covers the extras public programs leave out.
✓ Dental and vision care beyond what Medicaid pays for.
✓ Therapies, adaptive equipment, and assistive technology.
✓ Education, job training, and skill-building programs.
✓ Recreation, travel, and other quality-of-life expenses.
✓ A caregiver or companion beyond the hours Medicaid provides.
We draft each trust under New York law, alongside the other trust services we handle, and help you choose a trustee who understands the SSI and Medicaid rules well enough to keep your family member eligible.
Setting Up a Special Needs Trust at the Right Time
Set up a special needs trust as soon as you see money coming to your family member, or when you plan to leave them assets.
✓ A family member is about to receive a settlement or inheritance.
✓ You're naming a beneficiary with a disability in your will or life insurance policy.
✓ Your family member is turning 18 and will start receiving SSI or Medicaid on their own.
✓ You're getting older and want a plan in place for future care.
✓ More than one relative wants to leave money to the same family member.
Setting up the trust before any of these situations arrive gives you more options and avoids drafting under time pressure. If a settlement or inheritance is already on its way, we can move quickly to get the trust in place first.
Comparing Third-Party, First-Party, and Pooled Trusts
The right trust for your family depends on whose money funds it and how your loved one received it.
Third-party special needs trust
Funded with: Money from someone else, such as a parent or grandparent. Medicaid payback: Not required. Best fit: Families planning ahead with their own funds.
First-party special needs trust
Funded with: The beneficiary's own money, often a settlement or inheritance. Medicaid payback: Required after the beneficiary passes away. Best fit: Money the beneficiary already received directly.
Pooled special needs trust
Funded with: Combined contributions managed by a nonprofit in separate accounts. Medicaid payback: Sometimes applies, depending on the program. Best fit: Smaller amounts or situations where no family member is available as trustee.
Many special needs trusts are set up as irrevocable trusts, which helps keep the funds outside the beneficiary's countable assets.
Special Needs Trusts vs. ABLE Accounts
often ask how a special needs trust compares to an ABLE account. Both protect eligibility for Medicaid and SSI, but they work differently.
Contribution limit
Special needs trust: No contribution limit. ABLE account: Annual limit tied to the yearly gift tax exclusion.
Who can fund it
Special needs trust: Family contributions, settlements, or inheritances. ABLE account: The beneficiary and others within the annual limit.
Housing expenses
Special needs trust: Covered without affecting SSI. ABLE account: Housing payments can reduce SSI.
Medicaid payback
Special needs trust: Sometimes required, depending on trust type. ABLE account: Required from remaining funds in many cases.
Best fit
Special needs trust: Larger amounts and long-term planning. ABLE account: Smaller, everyday expenses.
The two aren't an either-or choice. A special needs trust can hold larger amounts for long-term needs, while an ABLE account can handle day-to-day spending your family member manages more directly. We help you decide whether one or both make sense for your situation.
Fitting This Trust Into Your Larger Estate Plan
A special needs trust works best as part of a full plan, not on its own. We pair it with a pour-over will, a power of attorney, and a health care proxy, so every document reflects the same information about your family.
Before we draft anything, we take time to understand your family member's current benefits and support network. We also help you name a successor trustee, since this trust often runs for decades.
Medicaid and SSI rules shift over the years, so we build in regular reviews alongside the rest of your estate plan to keep everything current.
Coordinating Guardianship With Your Special Needs Trust
Sometimes a special needs trust handles the money side, while guardianship handles personal decisions.
What a special needs trust covers
It manages money on your family member's behalf and pays for extras that Medicaid and SSI do not cover.
What guardianship covers
It addresses decisions about medical care, housing, and daily life. Guardianship is often needed once a young adult with a developmental disability turns 18.
Our guardianship attorneys handle Article 17-A cases for young adults with developmental disabilities, and we coordinate the guardianship petition with the trust so both work from the same plan for your family.
Meet the Team Behind Your Trust
The same team supports you through the entire process, so you always know who you're working with.
✓ More than 500 families served, with a 98% client satisfaction figure across our engagements.
✓ Attorneys licensed in New York, Florida, and New Jersey.
✓ A Medicaid Planning Professional on our team, who helps coordinate SSI and Medicaid rules for special needs trusts.
✓ Coverage across Manhattan, Brooklyn, Queens, the Bronx, and Staten Island, with reach into Nassau, Westchester, Suffolk, Rockland, and Orange counties.
✓ A free initial consultation, in person or virtual.
Staying with one team means your trust, your guardianship questions, and the rest of your estate plan all stay in the same hands.
Ready to Talk Through Your Options?
Protecting your family member's inheritance while keeping their benefits secure takes careful drafting and the right trustee. We know this can feel like a lot to sort through, and a short conversation is usually enough to help you see how a trust fits into your family's plan.
We set fee terms in writing before any drafting begins, so you always know the scope from the start.
Book a call with us to talk through what a special needs trust could look like for your family.
Frequently Asked Questions
1. Will an inheritance or settlement affect my family member's Medicaid or SSI?
Yes, if it's paid directly to them. Placing it in a special needs trust instead keeps that money outside the asset limits for both programs, so their benefits stay intact.
2. What's the difference between a first-party and third-party special needs trust?
A third-party trust holds money from someone else, like a parent, and doesn't require Medicaid payback. A first-party trust holds the beneficiary's own money and does require repaying Medicaid afterward. We'll help you figure out which one fits your situation.
3. Who should serve as trustee?
It's often a family member, a professional fiduciary, or a nonprofit pooled trust program, depending on your situation. Whoever you choose, we make sure they understand the SSI and Medicaid rules well enough to protect the benefits.
4. Is there a limit on what the trust can pay for?
Distributions are meant to add to public benefits rather than replace them, so we'll walk you through what the trust covers and what it doesn't.
5. Does my family member need a guardian too?
Not always. A trust manages money, while guardianship covers decisions about medical care, housing, and daily life. We'll help you figure out whether you need one, both, or neither.
6. Can we change a special needs trust later?
A third-party trust often allows updates as your family's situation changes, depending on how it's drafted. A first-party trust has less flexibility because of the rules tied to its funding, and we'll explain what's possible for yours.
7. What happens to the trust when my family member passes away?
The trust distributes remaining funds according to its terms. First-party trusts often include a Medicaid payback, while third-party trusts typically pass what's left to other family members. We'll walk you through what to expect for yours.
8. Can more than one family member contribute to the trust?
Yes, a third-party trust often accepts contributions from multiple family members, such as both parents or grandparents, and we'll track those contributions from the start.
9. How do we pick a successor trustee?
Look for someone organized and trustworthy who's willing to learn the SSI and Medicaid rules, or consider a professional fiduciary if no family member is available. We'll talk through your options together and help you name a backup so the trust keeps running as it should.
