For families planning
a lifetime of care

Two of the most important programs for people with disabilities, Supplemental Security Income (SSI) and Medicaid, are means-tested. Eligibility depends in part on how much the person owns and how much income they receive. For SSI, the countable resource limit for an individual has been $2,000 for many years. Medicaid limits vary by program and state but are often similarly low.

This is where well-intentioned planning goes wrong. A grandparent who leaves $50,000 directly to a grandchild with a disability, or a parent who names that child as a beneficiary on a life insurance policy, may unintentionally push the person over the resource limit. The result can be a loss of benefits until the money is spent down, which often means it is spent on things Medicaid would otherwise have covered. Special needs planning exists to prevent that outcome.

A special needs trust, sometimes called a supplemental needs trust, is a legal arrangement that holds assets for the benefit of a person with a disability without those assets counting as the person's own resources for SSI and Medicaid purposes. The trustee, not the beneficiary, controls the money and decides how it is spent.

The word supplemental is the key idea. The trust is meant to pay for things that public benefits do not cover, such as education, recreation, travel, equipment, personal care attendants, and quality of life expenses. It is generally not meant to replace the basic support that benefits provide. How the trustee makes distributions matters: certain kinds of payments, particularly for shelter, can reduce the SSI benefit under Social Security's rules, so trustees are usually guided by an attorney on what to pay for and how.

A special needs trust must be drafted by an attorney who works in this area. The precise language determines whether the trust achieves its purpose, and a general-purpose trust document is not a substitute.

Special needs trusts come in two main forms, and the difference is where the money comes from.

A third-party special needs trust is funded with assets that belong to someone other than the beneficiary: typically parents, grandparents, or other relatives. It can be created during the funder's lifetime or through their will or living trust. Because the money never belonged to the person with the disability, the trust is not required to reimburse Medicaid when the beneficiary dies. Whatever remains can pass to other family members or to charity as the trust directs. For most families doing advance planning, this is the type under discussion.

A first-party special needs trust, often called a (d)(4)(A) trust after the section of federal law that authorizes it, is funded with the beneficiary's own assets. That situation arises when a person with a disability receives an inheritance outright, a personal injury settlement, back pay from Social Security, or accumulates savings above the limit. Federal law allows these funds to be placed in a first-party trust without a transfer penalty, but with conditions: the trust must be established for a beneficiary under age 65, and when the beneficiary dies, the state Medicaid program must be repaid from the remaining assets for the benefits it provided during their lifetime.

A pooled trust is a variation run by a nonprofit organization, which manages many beneficiaries' sub-accounts together. Pooled trusts can accept first-party or third-party funds and are sometimes used when the amount involved is too small to justify a standalone trust or when no suitable individual trustee is available. Florida has several nonprofit pooled trust programs.

When properly drafted and administered, assets held in a special needs trust are not counted as the beneficiary's resources. That is what allows the beneficiary to remain eligible for SSI and Medicaid while still having resources available for their benefit.

The trust's administration still has to respect benefits rules. Cash given directly to the beneficiary generally counts as income and reduces SSI dollar for dollar. Payments the trust makes for the beneficiary's shelter can be treated as in-kind support and may reduce SSI by a set amount. Payments made directly to third parties for goods and services other than shelter, such as paying a vendor for a wheelchair or a tutor for lessons, generally do not affect benefits. Trustees typically keep records and work from an attorney's guidance so that distributions are made in a way that preserves eligibility.

Eligibility for Medicaid in Florida is administered by the state, and Florida also offers home and community-based waiver programs through the Agency for Persons with Disabilities. Those programs have their own eligibility rules and, in some cases, waiting lists. The trust is only one piece of keeping a person qualified for the support they need.

An ABLE account is a tax-advantaged savings account created under Section 529A of the federal tax code for people whose disability began before a specified age. That age threshold was raised from 26 to 46 beginning in 2026, which made many more adults eligible. Florida's ABLE program is called ABLE United.

ABLE accounts differ from special needs trusts in several ways. The account is owned by the person with the disability, who can control it directly or through an authorized representative. Contributions from all sources combined are limited each year to an amount tied to the federal annual gift tax exclusion, with an additional allowance for beneficiaries who work. Earnings grow tax-free when used for qualified disability expenses, a broad category that includes housing, education, transportation, health, assistive technology, and basic living expenses.

For SSI purposes, the first $100,000 in an ABLE account is disregarded as a resource. Balances above that can affect SSI, though Medicaid eligibility is treated differently. Distributions from an ABLE account for housing are also treated more favorably than shelter payments from a trust, which is one reason families sometimes use both: a trust as the main long-term vehicle, and an ABLE account for day-to-day and housing expenses. Federal law permits a state to seek reimbursement from an ABLE account for Medicaid benefits after the beneficiary's death; whether and how that applies depends on current state rules, so it is worth confirming with an attorney.

Several features of Florida law and practice shape how families here plan.

In practice, a complete plan often includes a third-party special needs trust drafted by an attorney, a funding plan for that trust, an ABLE account for flexible spending, updated beneficiary designations and estate documents across the whole family so that gifts flow to the trust rather than to the individual, a decision-making arrangement for adulthood, and a letter of intent that captures what only the family knows.

The financial planning role is to make sure the money side of that plan is realistic: that the trust will actually be funded at the level the family expects, that the investments inside it match a horizon that may be measured in decades, and that the caregiver's own retirement and security are not sacrificed along the way.