-
-
For many people with disabilities, government benefits such as Supplemental Security Income and Medicaid are the foundation of their daily care and financial survival.
Both programs are needs-based, meaning eligibility depends on keeping assets below strict thresholds. A direct inheritance, no matter how well-intentioned, can push a beneficiary over those limits and trigger a loss of benefits until the inherited funds are spent down.
Years of careful planning and government assistance can unravel because of a bequest made without accounting for this reality.
-
-
-
A special needs trust, sometimes called a supplemental needs trust, holds assets for the benefit of a person with a disability without those assets counting toward their personal resource limits for SSI or Medicaid.
The trust owns the funds, not the beneficiary. A trustee manages and distributes them for purposes that supplement, rather than replace, what government programs provide. Used correctly, the trust enhances your loved one’s quality of life while leaving their benefits intact.
-
-
-
The trustee cannot make distributions that substitute for what Medicaid or SSI already covers, such as basic food and shelter in most circumstances. Beyond those limits, the range of permitted expenditures is broad.
Transportation, companionship, education, recreation, technology, dental and vision care not covered by Medicaid, personal care items, and travel are all legitimate uses.
A well-drafted trust gives the trustee sufficient discretion to respond to the beneficiary’s evolving needs over time while keeping distributions within safe boundaries.
-
-
-
A third-party special needs trust is funded with assets belonging to someone other than the beneficiary, typically a parent, grandparent, or sibling establishing the trust as part of their estate plan.
When the beneficiary dies, any remaining funds can pass to other family members or beneficiaries of the grantor’s choosing.
A first-party special needs trust, sometimes called a self-settled trust, is funded with assets that already belong to the person with the disability, such as a personal injury settlement or an inheritance received before a trust was in place.
Federal law requires these trusts to include a Medicaid payback provision, meaning the state must be reimbursed for benefits paid during the beneficiary’s lifetime before any remaining funds pass to others.
-
-
-
Yes, and one is significant. Louisiana’s forced heirship law grants children with a permanent disability a protected portion of a parent’s estate.
This creates a dilemma: leaving assets outright to a disabled child who receives means-tested government benefits may affect eligibility for programs such as SSI or Medicaid. At the same time, a parent generally cannot simply disinherit a forced heir for the purpose of protecting those benefits.
The proper solution is a carefully drafted special needs trust that satisfies the forced heirship obligation while protecting benefit eligibility. This requires an attorney with specific experience in both Louisiana succession law and federal benefit rules.
-
-
-
An ABLE account is a tax-advantaged savings account available to individuals whose disabling condition began before age 46, a threshold recently expanded under federal law. Louisiana administers its program through LA ABLE, managed by the Louisiana Tuition Trust Authority.
Contributions grow tax-free and can be used for qualifying disability expenses. The first $100,000 in an ABLE account does not count toward the SSI asset limit. Beginning in 2026,
Louisiana also offers a state income tax deduction for ABLE contributions of up to $2,400 for single filers and $4,800 for joint filers per beneficiary.
ABLE accounts are simpler and less expensive to establish than a special needs trust, but contribution limits and other restrictions make them a complement to trust planning rather than a replacement for it.
-
-
-
This requires careful attention. Naming a special needs trust as the beneficiary of a retirement account can trigger mandatory distributions that generate taxable income and potentially disrupt benefit eligibility, depending on how the trust is drafted.
Retirement assets require coordination between your estate plan and the trust’s terms to avoid unintended consequences. This is one of several reasons why special needs planning should never be treated as a simple add-on to a standard estate plan.
-
-
-
A letter of intent is not a legal document, but it may be one of the most valuable things you create for your loved one’s future.
It captures the personal knowledge that only you hold: your loved one’s medical history, daily routines, preferences, fears, relationships, and wishes.
When you are no longer able to provide care or guidance, the people who step in, including successor trustees and caregivers, rely on this document to understand the person behind the plan. No trust document can contain what a thoughtful letter of intent provides.
-
Ready to work with a Metairie, LA special needs planning lawyer to put a plan in place?
We can help you create personalized plan that provides for everyone on your inheritance list in the ideal manner. To get started, send us a message or call us at 504-831-2384.
