Critter Corner: How Do You Plan for the Financial Future of a Loved One with a Disability

Dear Hayek,

I am a caregiver for my adult son, who lives with a disability. What are some ways that I can help plan for his financial future?

Thanks for your help!

Fi Nanshul

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Dear Fi,

About 61 million adults in the U.S., or 1 in 4, live with a disability, according to the Centers for Disease Control and Prevention. A study by Fidelity found that more than half of caregivers of loved ones with disabilities had little time to prepare before assuming responsibility. Yet about one-third of those surveyed said it was easier than expected to create a plan for current and future expenses and understand government benefits that are available. Here are some tips to help caregivers plan for the financial future of their loved ones with disabilities:

• Access all available benefits: One of the most critical steps in providing for a child or beneficiary with disabilities is applying for Supplemental Security Income or Social Security Disability Insurance. You can apply online on the Social Security Administration’s website.
  • Also start looking at what other government benefits are available to you in your city, in your county, at the state level, and at the federal level. Benefits may include health-care concierge services that focus on helping families care for loved ones with complex, chronic or ongoing care needs.
• Set up targeted savings: Setting up targeted savings can help secure a disabled person’s financial future.
  • ABLE accounts allow people to save money while protecting eligibility for government benefits. Similar to 529 plans, ABLE accounts are managed by the states. An ABLE account lets families save up to $18,000 a year without impacting government benefits for someone who became disabled before age 26. The ABLE account can be set up when the individual with disabilities is over the age of 26, but the disabling condition must have occurred before age 26. However, as of January 1, 2026, the ABLE Age Adjustment Act passed will increase the age of when the disabling condition must have occurred from “before age 26” to “before age 46.”
  • ABLE accounts don’t replace estate planning, but they can be a valuable supplement to a comprehensive estate plan, including a Special Needs Trust.
  • If you were saving in a regular 529 plan and your child became disabled prior to 26, you can transfer those funds into an ABLE account. There are certain restrictions and limitations you need to follow, however.
  • For Virginia ABLEnow program, click here.
  • For Maryland ABLE Account program, click here.
  • For DC ABLE program, click here.
• Optimize Roth IRAs: If a disabled child or beneficiary inherits a traditional or Roth individual retirement account or a 401(k), they can stretch distributions over their lifetime, instead of having to withdraw money within 10 years like most beneficiaries. Optimizing Roth IRA conversions can be advantageous for the parent, but critical for the child, since doing so would allow parents to enable a disabled beneficiary to get tax-free distributions for life.
• Set Up a Special Needs Trust: Special Needs Trusts (SNTs) are set up to benefit individuals with disabilities. SNTs can protect a disabled person’s benefits and allow them to maintain their eligibility for government benefits such as Medicaid and SSI.  There are several different types of Special Needs Trusts.
  • Third-party Special Needs Trusts are created and funded by you, the parent or grandparent, and can be either a (1) stand-alone revocable or irrevocable trust that you create while you’re living or (2) testamentary special needs trust that’s written into your will or revocable living trust, which takes effect only upon your death.
    • There are also pooled third-party special-needs trusts managed by a nonprofit corporation.
  • First-party Special Needs Trusts are created by the individual with disabilities and must be irrevocable and can be either stand-alone or pooled. First-party special needs trusts are subject to Medicaid payback if there are any funds remaining in the trust upon the death of the beneficiary. Third-party special needs trusts are not subject to Medicaid payback. Read more about the different types of special needs trusts here.

Be sure to consult with an experienced Elder Law and Special Needs Planning attorney, such as Evan Farr, a Charter Member of the Academy of Special Needs Planners. The time to start planning is now. The attorneys at the Farr Law Firm can guide you through this process.

Hope this helps!

Hayek