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An Introduction to Special Needs Financial Planning

There are many forms of special needs financial planning. These may include third-party-funded special needs trusts, wills, powers of attorney, guardianships, ABLE accounts, and self-settled special needs trusts. These planning tools also help the financial advisor identify essential tax deductions. These can include the medical expense deduction, child and dependent care credit, and adoption credit. Financial planners should also familiarize themselves with the rules governing who is considered a dependent in a family of someone with special needs.

Second-to-die (survivorship) insurance

Special needs financial planning may include second-to-die (survivor) life insurance, or “dual life,” which pays out benefits when both parties die. Second-to-die life insurance is typically more economical than individual life insurance because it covers two people and provides a higher death benefit. It can be helpful for married couples to fund an irrevocable life insurance trust or pay estate taxes. Second-to-die policies usually pay benefits after both parties die, ideal if both spouses have medical conditions.

This type of insurance is typically tailored to affluent couples. Unlike term life insurance, survivorship policies pay out if both partners die. As a result, survivorship policies are beneficial when both partners have special needs. They can also be a good choice for business partners. In addition, second-to-die (survivorship) insurance can protect your assets from estate taxes.


Special needs trusts are used for a variety of different purposes. They are created to manage funds for a disabled person and to preserve the beneficiary’s eligibility for public benefits. Financial planning for people with disabilities is suitable for various situations, including an inheritance left to a disabled child or person, a personal injury claim, or estate for a disabled adult. 

A special needs trust can provide funds for various purposes, including paying for non-covered medical expenses, special classes, or education. Some funds may even be used to fund family vacations or unique experiences. You can use the funds to fulfill your child’s unique and meaningful purpose. By using special needs trusts, you can provide an extra edge for your child and help them receive the care they need.


Wills for special needs is essential for financial planning for the offspring of a disabled person. These arrangements can help the child receive government benefits or provide for their education. The first arrangements for disabled people were referred to as supplemental needs trusts’ because they supplement public benefit programs. Today, there are more than 150,000 ABLE accounts. In New York, Christine Matus, an attorney specializing in special needs trust planning, explains how to create a will for your unique needs child.

When drafting a will for special needs financial planning, consider the future. It is impossible to predict what your loved one might need in the future, and having a plan in place will protect your loved one from any potential pitfalls. On the other hand, a special needs trust allows your beneficiary to keep some of their government benefits even if you die. In addition, the trust will take care of the administration of these benefits and the beneficiaries of your estate.

Powers of attorney

Special needs financial planning is essential for individuals with disabilities as it helps resolve issues involving money management and asset protection. It also addresses issues related to guardianship, appointing someone to make legal decisions on behalf of an incompetent individual. Typically, this individual is disabled or has cognitive or physical limitations. With a power of attorney, your loved one can designate an agent who will make important decisions without facing the court’s scrutiny.

When deciding on a POA, you should include essential health and medical decisions. If you or someone close to you has limited ability, a general POA would not be appropriate. However, a POA would be necessary if you or a spouse wanted to sell the property or transfer ownership of a house. In such a scenario, you will need a POA if you or someone else becomes incapacitated.

ABLE accounts

An ABLE account is a particular account set up for disabled people to save for qualified expenses. While the amount that can be saved will vary by state, most states set a minimum of $300,000 and a lifetime maximum of half a million dollars. In addition, most ABLE accounts do not require an attorney or an investment advisor to establish, and some may even waive the initial setup fee. However, specific requirements must be met, such as being at least 26 years old and disabled.

ABLE accounts can be helpful for disabled individuals because they allow the disabled individual to save unspent work earnings, like those from their Social Security checks. The account does not allow disabled people to accumulate more than $2,000 in a single year, but the person can use this money to pay for educational expenses or transportation. Even small inheritances can be paid into an ABLE account through a third party. ABLE account money is tax-free, but funds in SNTs can be taxed each year.

Self-settled special needs trusts

When it comes to financial planning, self-settled special need trusts can help you make the most of your money. By setting up a trust, you can transfer ownership of assets to your child without worrying about disqualifying them from government benefits. The trust can hold anything from a child’s home to retirement plans and savings accounts. Unlike a traditional will, a self-settled special needs trust can be very flexible.

In addition to the benefits listed above, self-settled special needs trusts can help disabled individuals qualify for government assistance. This means that they can maintain access to their assets, which will allow them to pay for expenses not covered by government benefits. In addition, their financial health will not be affected, which can make it an excellent option for special needs financial planning. Lastly, self-settled special needs trusts are beneficial for people who want to help their disabled loved ones with financial planning.