There is a question that comes up in our practice more often than most people might expect: “Can I leave money to my child with a disability without them losing their benefits?”
The answer is yes, but only if the plan is structured correctly. For many families, a Special Needs Trust is the tool that makes that possible.
This month, in recognition of Autism Awareness Month, we want to walk through what a Special Needs Trust is, how it works in Illinois, and why getting the structure right matters more than most families realize.
What Is a Special Needs Trust?
A Special Needs Trust, also called a Supplemental Needs Trust, or SNT, is a legal arrangement that holds and manages assets for the benefit of a person with a disability, without those assets counting against the individual’s eligibility for government benefit programs like Supplemental Security Income (SSI) and Medicaid.
The core purpose is straightforward: the Trust supplements the benefits your loved one already receives, rather than replacing them. It is designed to fill gaps in areas such as transportation, technology, education, recreational activities, and other expenses that improve quality of life but are not covered by public programs.
What makes an SNT work is not just that assets are held in Trust. It is how the Trust is drafted, what distributions are permitted, and who is designated to serve as Trustee. Each of these decisions shapes whether the Trust genuinely protects your loved one or inadvertently puts their benefits at risk.
Why a Direct Inheritance Creates a Problem
To understand why a Special Needs Trust matters, it helps to understand the rule it is designed to work around.
Programs like SSI and Medicaid are means-tested, meaning eligibility depends on having very limited financial resources. SSI, for example, generally requires individuals to have no more than $2,000 in countable assets to qualify. If a disabled individual receives an inheritance, a direct gift, or a lump-sum payment that pushes their assets above that threshold, they may lose access to benefits they depend on for housing, healthcare, and daily support.
This is not a technicality. It is a real and immediate risk that catches families off guard every year, often because a well-meaning parent or grandparent left assets to a disabled loved one without understanding the consequences. A properly structured SNT removes this risk by ensuring that assets are held by the Trust rather than owned directly by the beneficiary.
Who Can Benefit from a Special Needs Trust in Illinois?
A Special Needs Trust can be appropriate for a wide range of individuals, including those with:
Autism spectrum disorder: particularly as families begin planning for what happens when parents are no longer able to provide day-to-day care or financial support.
Intellectual or developmental disabilities: where a loved one may never achieve full financial independence and may rely on public benefits throughout their lifetime.
Physical disabilities: including conditions that require ongoing medical care, adaptive equipment, or home modifications.
Acquired disabilities: including those resulting from accidents, illness, or conditions that develop over time, such as traumatic brain injury or serious mental health diagnoses.
If your loved one is currently receiving or may in the future receive SSI, Medicaid, or other means-tested government programs, a Special Needs Trust deserves a serious conversation.
Types of Special Needs Trusts
Not every SNT is the same, and the right structure depends on the source of funding.
A first-party SNT is funded with assets that belong to the disabled individual. For example, a personal injury settlement or an inheritance that was already received. These Trusts are subject to Medicaid payback requirements, meaning the state may recover some or all of the Trust assets after the beneficiary’s death to reimburse Medicaid costs.
A third-party SNT is funded by someone other than the beneficiary. Typically, a parent, grandparent, or other family member. These Trusts do not carry a Medicaid payback requirement and offer greater flexibility in the distribution of remaining assets after the beneficiary passes.
A pooled Trust is managed by a nonprofit organization and is sometimes used when creating a standalone SNT is not cost-effective. Assets are invested collectively but tracked separately for each beneficiary.
Understanding these distinctions matters because the wrong type of Trust, or a Trust drafted without accounting for these rules, can create exactly the problems it was meant to prevent.
The Role of the Trustee
A Special Needs Trust is only as effective as the person or institution managing it. The Trustee is responsible for making distribution decisions, maintaining records, understanding the rules governing benefit eligibility, and managing investments over a potentially very long time horizon.
This is not a role to fill casually. In many families, it makes sense to separate the Trustee role from the caregiver role. The person best equipped to handle the emotional and practical demands of day-to-day care is not always best suited for financial management and legal compliance. A professional or corporate Trustee can serve as either the primary or a backup fiduciary when that division of responsibility makes sense.
ABLE Accounts: A Complementary Tool
For families with a loved one on the autism spectrum or with other qualifying disabilities, ABLE accounts, established under the Achieving a Better Life Experience Act, can work alongside a Special Needs Trust rather than in place of it. 
ABLE accounts allow eligible individuals to save a limited amount each year for qualified disability-related expenses while preserving benefit eligibility. They offer more direct access to funds than a Trust, making them well-suited for day-to-day expenses. A Special Needs Trust, by contrast, is typically better suited for larger sums, long-term financial support, and assets transferred at death.
Used together, these tools give families a more complete and flexible picture for planning.
This Is Not a Document. It Is a System.
The most important thing we can say about Special Needs Trusts, and special needs planning generally, is that a document alone is not enough. The Trust must be drafted correctly, funded properly, coordinated with beneficiary designations across all accounts and insurance policies, and administered by someone who understands both the financial and benefits dimensions of the role.
We work with families throughout Chicago to build planning systems that protect their most vulnerable loved ones over a lifetime. If you have a family member with a disability and you are not sure whether your current plan accounts for their needs, that is the conversation we want to have with you.
TL;DR
A Special Needs Trust (SNT) allows families to leave assets to a loved one with a disability — including autism — without disqualifying them from SSI, Medicaid, or other means-tested government benefit programs. Illinois families have several SNT structures to consider, depending on the source of funding and their long-term goals. Because the rules governing these Trusts are complex and the stakes are high, working with an experienced estate planning attorney is essential to getting the structure right.
