Planning With Purpose: Estate Planning When You Have a Child With Special Needs

By a Father, Husband, and Certified Financial Planner™ Professional

As both a Certified Financial Planner™ professional and a father to a daughter with Down syndrome, I have had the unique perspective of experiencing the intersection of personal responsibility and professional knowledge. My wife and I are raising three wonderful children—two without special needs and one who faces a future with different challenges and opportunities. Recently, we revisited and reworked our estate plan, not only as an exercise in diligence but as an act of love. We wanted to ensure that our daughter with special needs would be cared for financially, emotionally, and practically—without disqualifying her from vital government support systems designed to protect and provide for individuals with disabilities.

Through that process, I became even more convinced of a truth I often share with clients: estate planning for families with a special needs child is not just important—it’s essential. The details matter, from how assets are titled to the kind of trusts you establish, and even how you think about college savings and long-term caregiving plans.

Let me share with you what we learned and what I now advise all families like ours to consider.

Why Special Needs Planning Requires Extra Care

Most parents want their children to inherit their fair share of the family estate. But when one of your children has a disability and receives (or may someday receive) government benefits like Supplemental Security Income (SSI) or Medicaid, an outright inheritance can do more harm than good. These programs are “means-tested”—meaning eligibility is based on limited income and assets. A well-intended inheritance can accidentally disqualify your child from receiving these essential supports.

That’s why traditional estate planning is not enough. Special needs estate planning requires a deeper level of consideration and customization to ensure your child with a disability is protected, supported, and empowered for the long term.

Understanding Asset Ownership and Titling

One of the first areas to examine is how your assets are owned and titled. If you name your special needs child as a direct beneficiary of any account—retirement, investment, life insurance, or otherwise—it could result in an outright inheritance. That may trigger a reduction or termination of government benefits, forcing your child to spend down the assets before re-qualifying.

In our own planning, we took a close look at every asset we owned—from brokerage accounts to life insurance policies—and removed our daughter as a direct beneficiary. Instead, we redirected her share to a trust specifically designed for her benefit, which I’ll explain in more detail below.

The same goes for titling jointly held assets, or even gifts made by well-meaning relatives. For example, if a grandparent names your child in their will or as the beneficiary of a savings bond, it could have unintended consequences. That’s why communication with extended family is critical—they need to understand the strategy and the importance of proper titling and beneficiary designations.

The Power of Special Needs Trusts

The cornerstone of any good special needs estate plan is the Special Needs Trust (SNT), sometimes also called a Supplemental Needs Trust. This legal tool allows you to set aside assets for your child’s benefit while maintaining their eligibility for public benefits.

There are two primary types:

• First-party SNTs are funded with the child’s own assets—perhaps from a legal settlement or an existing inheritance.
• Third-party SNTs are funded by someone else—typically the parents or other family members.

We established a third-party SNT for our daughter. This trust allows us to allocate her share of our estate to be managed and distributed for her supplemental needs—things like therapy, education, travel, recreation, and personal care—without replacing the support provided by government programs. The trust can pay for goods and services that improve quality of life but are not covered by Medicaid or SSI.

An essential aspect of a well-structured SNT is naming a trustee—someone or an institution that will manage the trust assets prudently, in accordance with the rules and the child’s best interests. In our case, we chose someone we deeply trust, with financial acumen and a heart for our daughter’s future.

Guardianship and Letters of Intent

Another layer of planning involves choosing who will care for your child if you’re no longer able to. Naming a legal guardian is an emotional but necessary step, particularly for children who will need lifelong support.

We also plan to write a Letter of Intent—a non-binding but incredibly valuable document that communicates our daughter’s routines, preferences, medical history, and support needs. This letter won’t replace legal documents, but it acts as a roadmap for future caregivers, trustees, and family members to understand her unique personality and care structure.

Planning for Siblings

Having more than one child adds another level of complexity—and emotional depth—to special needs planning. We want to be fair to all our children, but fairness doesn’t always mean equal.

In our situation, we considered the fact that our daughter with Down syndrome may need more financial resources over her lifetime, whereas our other children may grow into independence and financial self-sufficiency. So we adjusted our estate plan accordingly—still providing a meaningful inheritance for each child, but recognizing that “equal” doesn’t always mean equitable.

We will also involve our children (as age-appropriate) in discussions about the plan. We want them to understand the importance of supporting their sister emotionally, and perhaps even participating in her care someday—whether informally or through structured roles like co-trustees or successor guardians.

College Funds and ABLE Accounts

Another planning consideration is how to save for your child’s future without jeopardizing benefit eligibility. Traditional 529 college savings plans are helpful for children without disabilities, but for a child with special needs, we considered another option: the ABLE account.

ABLE accounts (Achieving a Better Life Experience) are tax-advantaged savings accounts specifically designed for individuals with disabilities who were diagnosed before age 26. These accounts allow contributions up to the annual gift tax exclusion amount (currently $18,000 in 2024), and the funds can grow tax-free if used for qualified disability expenses.

Importantly, the first $100,000 in an ABLE account is excluded from the SSI asset test, preserving benefit eligibility.

While 529 accounts are still viable for some educational goals, the ABLE account gave us more flexibility for a wide range of future needs—transportation, job training, housing, and more.

Funding the Trust: Life Insurance and Investments

Once you have a Special Needs Trust in place, the next question is how to fund it.

We chose to use a mix of life insurance and investment assets. Life insurance provided us with peace of mind that, if we pass when we are young, there will be a pool of funds available to care for our daughter. Meanwhile, our investment strategy allows us to set aside additional assets for the trust during our lifetime.

Some families consider survivorship (second-to-die) life insurance policies, which pay out after both parents pass—an effective strategy for funding a trust and providing stability for a child who may need lifelong support.

Working With the Right Team

Special needs planning is a multidisciplinary effort. You need more than a will—you need a plan that weaves together legal, financial, medical, and emotional threads into a fabric that will last long after you’re gone.

We worked closely with an estate planning attorney who specializes in special needs trusts, as well as our tax advisors to coordinate everything. As a CFP® professional myself, I knew the importance of assembling a team with expertise and compassion, as I’ve done that for my clients time and time again.

In Closing: A Personal Call to Action

Our journey as parents of a child with special needs has taught us many lessons—patience, perseverance, advocacy, and grace. But perhaps the most practical lesson is this: failing to plan is planning to fail—and our daughter deserves better than that.

If you have a child with special needs, I urge you to take the time to review your estate plan through this specialized lens. Don’t leave it to chance. Don’t assume that your love and good intentions are enough to protect them. Work with professionals who understand the legal nuances and can guide you through the process of designing a plan that aligns with your family’s values and vision. Many professionals can profess to be experts when it comes to planning for those with special needs, but very few have the personal passion and experience that comes from caring for that special loved one.

Your child deserves a future that is as bright, supported, and secure as possible. And with the right planning, you can help make that happen.

-Streamline Wealth and its representatives do not provide tax or legal advice. Therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation.-