Securing Your Disabled Child’s Future: The Essential Guide to Special Needs Financial Planning

Planning for a child with special needs presents unique challenges that require careful consideration and specialized legal expertise. While the journey may seem overwhelming, understanding the available financial tools and legal strategies can provide peace of mind and ensure your child’s long-term security.

Understanding the Financial Landscape for Special Needs Families

At any given time, over 14 million children in the U.S. have a special healthcare need and families are feeling the financial squeeze. While the costs associated with a disability vary depending on the type and severity, many conditions incur high costs that families feel unprepared to handle. For example, the average cost of autism is $60,000 a year through childhood.

Becoming the beneficiary of your assets can disqualify your child from receiving future assistance from government programs like Medicaid and Supplemental Security Income (SSI). The threshold is extremely low: as little as $2,000, or less, in your child’s name is disqualifying, depending on your state’s requirements.

Special Needs Trusts: The Foundation of Financial Security

A special needs trust is an important part of your child’s long-term financial plan. This is where you can put money that you save, that others give to your child as gifts, and that you receive from any insurance settlements. Instead, parents can establish a Special Needs Trust (SNT) and leave their assets to the trust. That way, the child can benefit and still qualify for outside assistance.

There are two main types of special needs trusts:

• First-Party Trusts: Funded by the beneficiary’s assets (e.g., an inheritance or injury award). After death, Medicaid must be reimbursed.
• Third-Party Trusts: Funded by someone other than the beneficiary. No Medicaid payback is required after death.

ABLE Accounts: A Modern Savings Solution

The “ABLE” account is a relatively new planning tool that offers an individual with disabilities a tax-free savings option (similar to a 529 College Savings Plan) that does not interfere with the individual’s eligibility for means-tested government benefits, such as Supplemental Security Income (SSI) and Medicaid.

ABLE accounts allow annual contributions up to $19,000 for 2025. ABLE accounts offer quick access to funds through debit cards, unlike SNTs which usually lack this convenience. However, the ABLE Act limits eligibility to an individual whose disability onset occurred prior to the age of 26 and who satisfies Social Security’s criteria regarding significant functional limitations stemming from the disabling condition.

Building Your Professional Support Team

When you have a child with a disability, a will should not be a do-it-yourself endeavor. Hire a lawyer who works specifically for people with disabilities and is aware of your state’s disability laws. For families in Nassau County, working with an experienced Estate Planning Lawyer Nassau County who understands the complexities of special needs planning is crucial.

In addition to trusted friends, family and caregivers, Filpi recommends three core professional members to help you look after your finances: a financial advisor who knows the ins and outs of planning for people with disabilities, a certified public accountant who understands how to file taxes on a special needs trust, and an estate attorney who specializes in special needs trusts.

Key Planning Considerations

Guardianship and Trustees

A trustee is the person who will be responsible for managing the special needs trust after your death. The trustee ensures that the money in the trust is spent only on your child with a disability and only on services that you’ve specified or that are appropriate to your child’s needs.

A word on trustees and guardians: They often are not the same person, and some financial advisors recommend that they never be the same person. By separating these roles, you ensure a “checks and balances” system for your child’s future needs.

Family Communication

Parents of children with disabilities should also notify family members once the SNT is established. Keeping others aware of the SNT and its purpose can help everyone plan more efficiently — and any assets people may have planned to leave to your child can be left to the SNT instead.

Working with Fratello Law for Your Special Needs Planning

Fratello Law, founded by attorney Cheryl L. Fratello in 2012, is a Long Island-based law firm with offices in Nassau County and Suffolk County. Our experienced elder law and estate planning attorneys and staff take pride in focusing on each client’s individual needs and taking the time to understand those specific needs. We welcome the opportunity to meet you and discuss your legal concerns.

We serve our clients by planning for and protecting assets with trusts, wills, and documents that ensure that agents are appointed to make legal and healthcare decisions in the event of an illness or disability. Our firm assists clients with Nassau County, Suffolk County, and New York City Medicaid applications to access care in the home, assisted living facilities, and nursing homes.

Taking Action: Your Next Steps

It’s ideal, though, to start putting the pieces in place before age 16. However, it’s never too late to begin planning. It’s hard not to worry about how your child will manage if you’re not around to help support him. Long-term financial planning can help relieve some of that stress and let you focus on meeting his needs now.

In some instances, it may be beneficial to create both. Many families find that using both ABLE accounts and special needs trusts provides the most comprehensive financial protection for their loved ones with disabilities.

Special needs planning requires expertise in disability law, government benefits, and estate planning. By working with experienced professionals who understand these complex intersections, you can create a comprehensive plan that protects your child’s financial future while preserving their eligibility for essential government benefits. The peace of mind that comes from knowing your child will be financially secure is invaluable for any parent facing these challenges.