Protecting disabled adults’ assets and benefits is critical. This is often called estate planning or financial planning.
CalABLE Accounts
Special Needs Trusts
ABLE Account, Special Needs and Pooled Trust Comparison Chart
Financial planning is helpful even if families don’t have a lot of money. In fact, some professionals might say having a financial plan for your loved one with a disability is more important if your family doesn’t have a lot of money.
Recent legislation increases the eligibility age of beneficiaries of all ABLE accounts from the onset of disability before age 26 to age 46 — beginning January 1, 2026. Until then, only individuals who have a qualifying disability beginning before age 26 are eligible to open a CalABLE account.
Saving money is crucial for people with disabilities to live full lives. A financial plan can help determine how a person with a disability will pay for the things they want and need in the future.
When planning for the future, it may be valuable to get the advice of a lawyer and/or a public benefits consultant who is familiar with all of the options, and the pros and cons of each.
California Achieving Better Life Experience – better known as CalABLE Account
Individuals with a disability that occurred before they turned 26 years old are eligible to open a CalABLE account. If the individual with a disability that occurred before they turned 26 also receives benefits under Supplemental Security Income (SSI) and/or Social Security Disability Insurance (SSDI), they are automatically eligible to open a CalABLE account.
CalABLE accounts provide federal and California state tax-free treatment on earnings and withdrawals to pay for disability-related expenses such as:
- Education or training
- Employment support
- Housing
- Transportation
- Assistive technology
- Healthcare
A CalABLE account could provide for emergency funds if needed to keep a person with a disability independent and productive.
Monies in CalABLE accounts are not considered when determining a person’s assets until the savings reach $100,000.
See the CalABLE Frequently Asked Questions and PHP’s video CalABLE Accounts: Everything You Need to Know for more info.
Many states have ABLE accounts, and people are free to enroll in any state’s program provided that the program is accepting out-of-state residents. For more, see state pages. Check out Becoming ABLE Ready for a more detailed understanding of how to begin to compare programs and for things to think about when preparing to open an ABLE account.
Special Needs Trusts
A Special Needs Trust allows for a person with a disability to maintain their eligibility for public assistance benefits, despite having assets that would otherwise make the person ineligible for those benefits.
There are 3 types of Special Needs Trusts, all of which are legal tools that can be used to help people with disabilities maintain their eligibility for public benefits, like Supplemental Security Income, Medicare, or Medi-Cal, and be used for expenses such as education, transportation, and medical expenses that are not covered by government benefits:
First-Party Trust: A first-party special needs trust (also called a self-settled special needs trust) is funded with the assets of a person with a disability, such as an inheritance, a personal injury settlement, or other funds that they have received directly. A trustee manages the fund for the person with a disability, known as the beneficiary. Certain requirements must be met – including a Medi-Cal payback provision – meaning funds in the trust after the beneficiary’s death must be used to reimburse the government for any Medi-Cal benefits received during the person’s lifetime.
Third-Party Trust: A third-party special needs trust is funded by someone other than the person with a disability (beneficiary), such as a parent, grandparent, or someone else. The assets in a third-party special needs trust are owned by the trust, and managed by the trustee for the beneficiary. A third-party trust does not include the Medi-Cal payback provision, as the funds in the trust never belong to the beneficiary.
Pooled Trust: A pooled special needs trust allows individuals with disabilities to receive the benefits of a special needs trust while also benefiting from a larger investment pool. It is managed by a nonprofit organization, which serves as the trustee and pools the assets of multiple beneficiaries into a single investment account. A pooled trust could be a cost-effective option for people with smaller trust who want the benefits of a special needs trust without the potentially high costs associated with establishing and maintaining an individual trust. Good to be aware that a pooled trust typically includes a Medi-Cal payback provision.
It’s important to know that special needs trusts must meet certain legal requirements, to be valid, so beneficiaries and trustees may want to work with an experienced attorney to ensure that the trust is structured properly to suit their needs.
Parents/caregivers may also want to understand how to prepare a Letter of Intent – a document that provides guidance and instructions regarding the care and well-being of an individual with special needs. A Letter of Intent could include: an introduction, the individual’s Person-Centered Plan, history/ background information, daily routine and preferences, medical and therapeutic care, education, employment, social/recreational activities, personal support network, future planning goals, and instructions about managing funds.
A letter of intent is a supplement to a special needs trust, and is not a legal document in and of itself. It helps ensure that the trustee understands the specific needs, preferences, and desires of the individual with the disability. It is intended to be a living document, with periodic updates/amendments as the individual grows and changes – and if possible, include the person with the disability in creating the letter of intent, as it is the foundation of any comprehensive life-plan for a person with special needs.
Public benefits and housing options are also factors to consider when planning for your loved one’s financial future. The Arc’s Center for Future Planning: Future Planning 101 may be a valuable resource for your family, as are these Special Needs Financial Planning Resources, including A Parent’s Guide to Special Needs Trusts.