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Case study · Hypothetical family

Planning for a Child with Special Needs

Maria and James want their son Leo, who has Down syndrome, to be cared for for life without losing the public benefits he may rely on. Here's how a family like theirs might think it through.

In one minute

  • For SSI, an individual generally can't have more than $2,000 in countable resources.1 Leaving money directly to a child with a disability can put benefits at risk.
  • A third-party special needs trust can hold an inheritance for the child's benefit without it counting as theirs.2
  • A CalABLE account lets the child save, and the first $100,000 doesn't count for SSI.3 Since 2026, disability must begin before age 46.4
  • At 18, parents lose automatic legal authority. Families often look at supported decision-making or a limited conservatorship.5
The situation

Meet the family

Maria and James are in their early 40s and live in Orange County with two children. Leo is 12 and has Down syndrome. His older sister, Ana, is 15. Their wills, written years ago, split everything equally between the kids. Grandma has also said she'll "leave something to Leo."

This family is hypothetical. Names and details are invented to show how the planning questions fit together.

The hidden risk

Good intentions, the wrong result

As an adult, Leo may qualify for Supplemental Security Income (SSI) and Medi-Cal. SSI looks at what a person owns. An individual generally can't have more than $2,000 in countable resources.1

If Leo inherited half of his parents' estate, or Grandma's gift, outright in his own name, he could lose eligibility until the money was spent down. A well-meaning will can undo years of careful benefit planning.

The options

The main tools families use

A third-party special needs trust

Parents (and grandparents) leave money to a trust for Leo instead of to Leo. A trustee uses it for things that improve his life. Because the money was never Leo's, it generally isn't counted as his resource for SSI.2

Helps withInheritances, life insurance proceeds and gifts from relatives. Whatever's left at Leo's death can go to Ana or others.
Watch forIt must be drafted correctly, and everyone (including Grandma) must name the trust, not Leo, in wills and beneficiary forms.

A CalABLE account

California's ABLE program lets a person with a qualifying disability save and invest. For SSI, the first $100,000 in an ABLE account is disregarded.3 Starting in 2026, the disability must have begun before age 46, up from 26.4

Helps withLeo's own savings, paychecks and day-to-day spending on qualified expenses.
Watch forAnnual contribution limits, and Medi-Cal may be repaid from what's left at death.

A letter of intent

Not a legal document, but often the most used one: Leo's routines, doctors, medications, likes, fears and what calms him. It guides whoever steps in after Maria and James.

Life insurance to fund the trust

Many families use life insurance, owned or payable so it lands in the special needs trust, to make sure there's money for Leo's lifetime. Coverage type, amount and cost depend on the parents' health, budget and goals.

A deadline that sneaks up

When Leo turns 18

At 18, Leo becomes a legal adult, and his parents no longer have automatic authority over his medical, financial or legal decisions. Options range from supported decision-making and powers of attorney (if Leo can sign them) to a limited conservatorship, which California uses for adults with developmental disabilities.5

Families often start this conversation around 17, with Leo's regional center and an attorney.

Takeaways

What a family like this might do

  1. Update the wills or living trustLeo's share goes to a special needs trust rather than to him directly.
  2. Tell the relativesGrandma names the trust too, not Leo, in her will and beneficiary forms.
  3. Review beneficiary designationsRetirement accounts and life insurance often pass outside the will.
  4. Name trustees and guardiansWho manages the money, and who raises Leo if both parents die while he's a minor.
  5. Write the letter of intentAnd update it every year or two.
  6. Plan for 18Decide on decision-making support before his birthday.

Planning for a family member with a disability?

A conversation can help you organize the questions, the people and the paperwork, and know what to bring to a special needs planning attorney.

Book a time with Kevin Hypothetical example. Kevin is not an attorney. Special needs trusts and conservatorships should be handled by a licensed California attorney.

Sources

  1. Social Security Administration, Understanding SSI: SSI Resources. Accessed November 10, 2026.
  2. Social Security Administration, Spotlight on Trusts. Accessed November 10, 2026.
  3. Social Security Administration, Spotlight on ABLE Accounts, 2026 edition. Accessed November 10, 2026.
  4. CalABLE, California State Treasurer, Understanding the ABLE Age Adjustment Act. Accessed November 10, 2026.
  5. Judicial Council of California, Self-Help Guide, Limited conservatorships. Accessed November 10, 2026.

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