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Estate Planning for Disabled Beneficiaries

Davidson Estate Law March 25, 2024

Cropped image of man using wheelchair on streetFacing the future with a disabled loved one can be both uncertain and intimidating. It's a path that requires not just love and patience, but also strategic planning to ensure their needs are met, their dignity is respected, and their quality of life is enhanced to the fullest possible extent. Crafting a life plan for a loved one with disabilities goes beyond mere financial or legal considerations—it's about understanding their world, needs, and rights.  

Davidson Estate Law offers a beacon of support for families and individuals looking to begin estate planning for disabled beneficiaries. It's more than just safeguarding assets; it's about providing a blanket of protection and care that lasts a lifetime, ensuring your loved one remains embraced by comfort, security, and unwavering support. 

Understanding Estate Planning for Disabled Beneficiaries 

When we talk about disabled beneficiaries, we are referring to individuals who have a physical or mental disability and are eligible to receive assets from an estate plan. These individuals often qualify for government benefits such as Medicaid, but any additional income or assets they receive can potentially jeopardize their eligibility for these benefits. It's wise to approach estate planning carefully with disabled beneficiaries in mind to make sure their interests are protected while also preserving their access to vital government support. 

Laws and Regulations That Protect Disabled Individuals  

Various laws and regulations exist to protect the rights of disabled individuals. For instance, the SECURE Act provides guidelines on estate planning for disabled beneficiaries. These rules define disability as “the inability to engage in any substantial gainful activity (SGA) by reason of any medically determinable condition." In essence, these laws aim to ensure that disabled individuals receive fair treatment and that their specific needs are met in all aspects, including in estate planning. 

Considerations in Estate Planning for Disabled Beneficiaries  

When estate planning for disabled beneficiaries, certain key considerations are critical for maintaining their well-being and financial security. As your legal counsel, our team can review these aspects of estate planning with you and formulate a plan that works for you and your loved ones. 

Financial Needs 

One of the primary considerations in estate planning for disabled beneficiaries is their financial needs. Many disabled individuals rely on needs-based government benefits for their daily living expenses. Therefore, you should structure their inheritance in a way that does not disqualify them from receiving these benefits. It’s also important to think about and plan for their long-term financial needs that will be there even after you have passed away.  

Medical Needs 

Disabled beneficiaries often have ongoing medical costs, which may be covered by government benefits. If not planned properly, an inheritance could disqualify them from these benefits, leaving them with significant out-of-pocket medical expenses. Together, we can conduct a full assessment of their medical needs both now and in the future.  


If the disabled beneficiary cannot manage their finances due to their disability, a guardian may need to be appointed. This person would then be responsible for managing their inheritance and ensuring it is used in the beneficiary's best interest. 

Tools for Estate Planning for Disabled Beneficiaries  

To ensure that disabled beneficiaries are well cared for and their financial futures are secure, several estate planning tools are specifically designed to meet their unique needs. These tools not only safeguard their access to necessary government benefits but also provide a stable financial foundation for their future. 

Special Needs Trusts 

One of the most effective tools for estate planning for disabled beneficiaries is a special needs trust (SNT). This type of trust preserves the beneficiary's eligibility for needs-based government benefits, while also providing funds for additional needs not covered by these benefits. 

In California, for example, there are two types of SNTs: first-party and third-party. A first-party SNT is funded with the beneficiary's assets, such as a personal injury settlement or an inheritance. On the other hand, a third-party SNT is funded with assets from someone else, such as a parent or grandparent. 

ABLE Accounts 

ABLE accounts, which stand for Achieving a Better Life Experience, provide a tax-advantaged way for individuals with disabilities to save money without risking their eligibility for certain public benefits. They are often included in special needs trusts.  

In California, these accounts allow disabled beneficiaries or their families to save up to $100,000 without affecting their eligibility for SSI (Supplemental Security Income) benefits. Additionally, the money in an ABLE account can grow tax-free and can be withdrawn tax-free, provided it is used for qualified disability expenses, which may include education, housing, transportation, healthcare, and personal support services.  

ABLE accounts are an essential tool in the financial planning toolkit for families with disabled beneficiaries, helping to ensure these individuals have the resources they need to lead fulfilling lives, without compromising their access to crucial government support. 

Life Insurance 

Life insurance can also play a role in estate planning for disabled beneficiaries. A policy can ensure that the beneficiary has financial support after the death of the policyholder. 

The Role of the Estate Planner  

An estate planner must have a deep understanding of the laws and regulations surrounding estate planning for disabled beneficiaries. Additionally, they should be able to provide guidance on the appropriate tools and strategies to ensure that the beneficiary's needs are met without jeopardizing their access to essential government benefits. Whether you're considering setting up a special needs trust, exploring the benefits of ABLE accounts, or seeking advice on guardianship issues, we're here to support you. 

Protect Those You Love 

Estate planning for disabled beneficiaries can feel overwhelming, but remember, you're not alone on this path. Our dedicated team at Davidson Estate Law is here to guide you through every step, ensuring that your estate planning process is thoughtful, comprehensive, and tailored to the unique needs of your loved ones. Contact us today for a free consultation and to chart a course for a secure and fulfilling future for those you cherish most. Their well-being is our priority, and together, we can create a legacy of love and protection.