Do you have a child, grandchild, or other close loved one with special needs? If so, it is imperative that you take a proactive approach to planning for their case. A special needs trust is one of the most valuable, important estate planning tools for people who have disabled family members. You generally do not want to leave money or property directly to a loved one with special needs, especially if they are a recipient of Medicaid and/or Supplemental Security Income (SSI). An Indianapolis elder law attorney can explain the benefits of trusts in Indiana.
The Estate Planning Challenge With Special Needs Planning
If you have loved ones with special needs, estate planning comes with some specialized challenges. Here is the big one: Leaving money directly to a disabled loved one can disrupt essential benefits. It is a huge issue to consider for many families in Indiana. Why does it work that way? Public programs (including Medicaid and SSI) impose strict income and asset tests for eligibility. In other words, even a modest inheritance can cause immediate loss of eligibility, which then forces the family to reapply, repay, or attempt to unwind transfers after the fact. These programs are often the backbone of long-term medical and residential support. A loss of eligibility can destabilize the entire plan for continuity of care. The challenge is simple to state and harder to solve. Families need a way to provide resources without displacing the public benefits that cover key services.
The other challenge is control. Disabled beneficiaries often cannot manage funds on their own or may be vulnerable to financial exploitation. Even those who can participate in decision-making may need structure to ensure that resources last for decades. Ordinary wills, joint accounts, or informal family arrangements rarely accomplish this. They lack accountability, legal protection, and coordination with benefits law. The goal of special needs planning is to create a legal structure that holds money safely, preserves benefits, and ensures that support continues after the caregivers are gone. A special needs trust is the best solution for many families in Indiana.
An Overview of the Role of a Special Needs Trust
The American Bar Association (ABA) explains that a special needs trust is a type of trust that can be used to provide resources to a medically vulnerable person without undermining their eligibility for SSI, Medicaid, and other state and federal public programs. The trustee controls distributions. The beneficiary cannot demand funds directly, which is essential because direct control would convert trust assets into countable resources. The trust may pay for supplemental needs that public programs do not cover. Among other things, this includes:
- Education;
- Therapy;
- Home modifications;
- Transportation; and
- Quality-of-life expenses.
There are multiple categories of SNTs, but the two most common are first-party and third-party trusts. A first-party SNT holds the beneficiary’s own assets, usually personal injury settlements or improperly received inheritances. It must include a Medicaid payback clause. A third-party SNT holds assets from parents, grandparents, or other relatives and does not require repayment to Medicaid. Third-party trusts allow greater planning flexibility because they are funded with someone else’s property. Any type of special needs trust should always be set up by a lawyer.
Two Key Steps to Ensure Long-Term Care and Support for Disabled Family Members
If you have a loved one with special needs in Indianapolis or elsewhere in Indiana, an experienced attorney can help you put the right structure in place. Here are two key steps that are foundational to special needs planning:
- Financial Protection: Financial protection begins with determining which assets should fund the trust and which assets should remain outside of it. Families often use life insurance because the payout is predictable and can be directed straight into the SNT through beneficiary designations. Retirement accounts require more care because naming an SNT as beneficiary triggers complex tax treatment. In many cases, a standalone SNT is paired with a supplemental trust or coordinated with a parent’s estate plan. The trustee must be someone who understands fiduciary duties and the beneficiary’s needs. Financial protection is not only about shielding funds from counting toward Medicaid or SSI. For this reason, a special needs trust is often the best available option.
- Instructions for Care: A special needs trust handles money, but money alone does not ensure proper care. Families often create a companion document called a “letter of intent.” It is not legally binding, but it guides the trustee on daily routines, communication preferences, medical history, triggers, strengths, and long-term goals. This document fills the gap between legal structure and real life. It helps future caregivers understand the beneficiary as a person, not just a case file. Without it, trustees may have authority but lack direction. It should be noted that care instructions require coordination with the broader estate plan. Guardianship or supported decision-making arrangements may be necessary. Medical powers of attorney and HIPAA releases ensure access to health information. Of course, with care instruction plans, there is no one-size-fits-all solution.
Why Trust White & Jocham for Special Needs Planning in Indiana
Special needs planning is complicated. Without the right strategy in place, you could inadvertently undermine your vulnerable loved one’s public benefits. At White & Jocham, we are proud to be leaders in special needs planning in Indiana. Our team is compassionate, experienced, and committed to finding solutions that work for you and your family. Your initial consultation with our Indianapolis special needs planning lawyer is confidential and carries no additional obligations.
Contact Our Indianapolis Special Needs Planning Lawyer Today
At White & Jocham, our Indiana estate planning attorney has extensive experience with special needs planning. If you have any questions or concerns about a special needs trust, please give us a call now or contact us online today for a fully confidential consultation. We provide special needs trust planning services in Indianapolis, Greenfield, and throughout the region.
