Special Needs Definitions

Common Special Need Planning Terms Defined

When we talk about planning for a loved one with special needs, there are certain legal and financial terms that can feel unfamiliar. Our goal is to make these concepts clear so you feel confident in the decisions you make for your family. Below, we’ve gathered some key terms that often come up in special needs planning, along with plain-language explanations of what they mean.

Special Needs Trust

A Special Needs Trust (SNT) is a legal arrangement that holds and manages assets for a person with disabilities without affecting their eligibility for government benefits like Supplemental Security Income (SSI) or Medicaid. The trust can pay for items that improve quality of life, such as therapy, adaptive equipment, or travel, but it does not replace public benefits.

First-Party Special Needs Trust

Sometimes called a self-settled trust, this type is funded with the beneficiary’s own assets, such as an inheritance or settlement. Federal and state laws require that any funds remaining in the trust at the beneficiary’s death may be used to reimburse Medicaid.

Third-Party Special Needs Trust

This trust is funded with assets that belong to someone other than the beneficiary, usually a parent, grandparent, or other family member. It is often part of an estate plan to provide for a loved one with disabilities after the caregiver passes away. Unlike first-party trusts, these do not have a Medicaid payback requirement.

Pooled Trust

A pooled trust combines funds from multiple beneficiaries for investment purposes while keeping individual accounts separate. These trusts are managed by nonprofit organizations and can be an option for families who want professional management without creating their own standalone trust.

ABLE Account

An Achieving a Better Life Experience (ABLE) account allows individuals with disabilities to save money in a tax-advantaged account without losing eligibility for SSI or Medicaid, up to certain limits. Funds can be used for qualified disability expenses such as education, housing, or transportation.

Guardian or Conservator

A guardian is appointed by a court to make personal and medical decisions for someone who is unable to do so. A conservator is responsible for managing financial matters. In some states, the same person may serve in both roles.

Power of Attorney

A Power of Attorney (POA) is a document that allows one person to make decisions for another. In the context of special needs planning, this can cover financial matters, healthcare decisions, or both, depending on the document’s scope.

Public Benefits

This term refers to government programs that offer financial, medical, or other forms of assistance to eligible individuals with disabilities. Examples include SSI, Medicaid, and housing assistance programs.

Representative Payee

If a person with disabilities receives SSI or Social Security Disability Insurance (SSDI) and cannot manage their benefits, the Social Security Administration may appoint a representative payee to receive and manage those funds on the beneficiary’s behalf.

Life Care Plan

A life care plan outlines the current and future needs of a person with disabilities. It can cover medical care, living arrangements, therapies, and funding sources. This plan serves as a guide for family members and caregivers over time.

We believe that understanding these terms helps families feel more confident when making important choices. If you’d like to talk with us about how these concepts might apply to your family’s situation, we invite you to contact our office and start the conversation.