Perkins School for the Blind Transition Center

Notes, Buckets, and Beneficiaries: An Introduction to Special Needs Planning

Having loved ones with special needs requires specialized planning to meet their unique financial requirements. The search for direction about financial assistance (benefits and support provided by government agencies) and special needs planning (preparation for future financial needs) can be especially frustrating for caregivers amidst their other pressing daily concerns. Providing information and resources to help plan for quality of life during a lifetime of care is the primary focus of a special needs financial planner.

Special needs financial planning for your family

Proper financial planning is vitally important so that families and caregivers can plan for their loved ones while preserving their eligibility for government services. Over decades of planning, we’ve found that families have been concerned about three primary financial priorities:

  1. Making sure their dependents always qualify for government support services
  2. Answering the question, “What happens when I’m gone?”
  3. Maximizing their resources, regardless of their economic status

Strategies to address all three are centered on a few basic ideas.

In most states, Medicaid is the primary source of services for individuals with special needs. While there are multiple ways to remain Medicaid-eligible, most often it is necessary for the person to have less than $2,000 of assets in their name. Achieving a Better Life Experience (ABLE) accounts allow the individual to deposit $16,000 per year and accumulate up to $100,000 without jeopardizing government support benefits. However, they do have a few drawbacks and typically cannot be the main source of long-term support planning  (see for details). Most importantly, if an ABLE account owner passes away with monies left in the account, Medicaid gets reimbursed for the cost of its services from the account balance remaining. ABLE accounts and special needs trusts (discussed below) have different eligible expenses and restrictions, so using them in conjunction is often most helpful for families. An advisor with special needs expertise can explain the ins and outs of each.

Special Needs Funding Coach

In our opinion, the combination of estate and financial planning remains the most effective way for families to realize their wishes for their dependents. In the estate planning area, using a qualified special needs attorney should be considered critical (they can be identified at,, or  While estate planning encompasses individualized plans that often include additional items, this article will focus on a simple understanding of wills, trusts, and beneficiaries of life insurance, accounts, and retirement plans.

Wills = Notes

Most are aware of the importance of writing a will as a legally binding plan to be enacted upon your death. To simplify, we consider a will to be a note. If someone were going to watch your home and family while you went away for a weekend, you would leave them a note (how to reach you, what’s important to know about the house, etc.). Essentially, what a will accomplishes is to legally say what will happen to all of your “stuff,” who will become guardian of your dependents, and who will be responsible for these tasks (the executor). A will may have specific references to creating a trust and may also reference a letter of intent, a detailed plan of how you would like your loved ones with special needs to live after you are gone.

Trusts = Buckets

We consider a special needs trust to be a crucial component of a successful financial and estate plan. There are many kinds of trusts; a special needs trust is a particular type that is imperative to allow individuals with special needs to retain government services eligibility. In simple terms, we consider a trust to be a bucket. What does a bucket do?

A bucket holds things. As your personal legal bucket, a trust allows you to put assets in it, either while you are living or after you are gone. Those assets may be used for dependents with special needs while not having the assets in their names (which would violate Medicaid requirements).

A bucket protects what is in it from outside sources. In special needs planning, it protects the owner of those assets from losing government services eligibility. It also protects them from unscrupulous people or civil litigation, such as divorce. We do not recommend leaving assets directly to a sibling or other caregiver because, once the assets or funds are in that person’s name, they can become part of a lawsuit or divorce. Having the funds in the trust (in the name of the individual with special needs) avoids these issues.

A bucket allows you to control how things come out of it. You may pour out a little at a time, dump it all out at once, or anything in between. A trust, particularly a special needs trust, allows the grantor to control assets so they may be used for a dependent with special needs even after you are gone.

The above is a basic overview to help families understand how these important documents make a difference in the lives of their loved ones with special needs. Working with qualified special needs attorneys is critical to the success of your plan. The last thing you would want to happen after your death is for Social Security, Medicaid, or other government agencies to determine that your trust doesn’t qualify as a special needs trust because it wasn’t properly written. The only things that can correct this problem are time and money…and who will correct the problem after you are gone?

Check Your Beneficiaries

Lastly, knowing that individuals with special needs cannot have more than $2,000 of assets in their names, here is your easily-done action item: make sure that no individual with special needs is a primary or contingent beneficiary of any relative’s life insurance policy or retirement plan like a 401(k), IRA, or pension. Most group life and retirement plans, as well as individual policies, use a default option for contingent beneficiaries that splits proceeds between all surviving children, therefore putting government support benefits in jeopardy. Instead, use special needs trusts and an ABLE account to hold those funds and provide for their future.

Donald T. Brown, ChFC, ChSNC, is a Financial Planner, and Elizabeth Neumann, MA, is a Client Relationship Manager with Special Needs Funding Coach.

Learn more at or our Facebook, LinkedIn, and Twitter pages. Don can be reached directly at or (848) 200-7148. Contact Elizabeth at or (848) 200-7155.

Donald Brown is a Registered Representative and Investment Adviser Representative of Equity Services, Inc. (ESI). Securities and investment advisory services are offered solely by ESI, Member FINRA/ SIPC, 200 Schulz Drive, Suite 125, Red Bank, NJ 07701, 848.200.7170. Special Needs Funding Coach is independent of ESI. We do not offer tax or legal advice. For advice concerning your own situation, please consult with your appropriate professional advisor. TC135030(0823)1

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