Special Needs & Disability Planning

Question 1

Can I Set Up a Special Needs Trust for a Disabled Beneficiary in Arizona?

Accepted Answer

Yes. A special needs trust in Arizona lets you provide for a disabled beneficiary without jeopardizing their SSI or AHCCCS benefits. Assets in the trust do not count toward benefit limits, and the trustee can pay for items that improve the beneficiary's quality of life.

Question 2

What is the difference between a first-party and third-party special needs trust, and which one do we need?

Accepted Answer

A first-party special needs trust holds the beneficiary's own assets and requires Medicaid payback at death. A third-party trust holds family contributions with no payback. The right choice depends on whose money funds the trust.

Question 3

What is an ABLE account, and can it work alongside a special needs trust for my child in Arizona?

Accepted Answer

An ABLE account lets a person with a qualifying disability save money without losing SSI or Medicaid eligibility. It works alongside a special needs trust, handling daily expenses while the trust covers long-term needs.

Question 4

Who will take care of my disabled child after both my spouse and I are gone? How do I plan for that?

Accepted Answer

A special needs trust, combined with a named caregiver, a letter of intent, and a long-term financial plan, protects your disabled child's care and public benefits eligibility after both parents are gone.

Question 5

What can a special needs trust NOT pay for in Arizona?

Accepted Answer

A special needs trust cannot pay cash directly to the beneficiary, or pay for shelter expenses without reducing SSI. Food payments no longer reduce SSI as of 2024. The trust should not pay for Medicaid-covered services or put assets in the beneficiary's name above the $2,000 SSI limit.

Question 6

Can a special needs trust own a house or pay rent in Arizona?

Accepted Answer

Yes, a special needs trust can own a home or pay rent in Arizona. Shelter payments reduce SSI by up to the presumed maximum value (~$315/month in 2026) under in-kind support rules, but SSI is not eliminated. A trust-owned home is an exempt resource for SSI asset counting if the beneficiary lives there.

Question 7

What are the disadvantages of a special needs trust?

Accepted Answer

The main disadvantages of a special needs trust are setup costs ($3,000-$8,000+), ongoing trustee fees, strict record-keeping requirements, housing payments that still reduce SSI, and Medicaid payback for first-party trusts. The beneficiary also has no direct control over the funds.

Question 8

What is a pooled special needs trust, and is PLAN of Arizona right for my family?

Accepted Answer

A pooled special needs trust is managed by a nonprofit that pools investments from many beneficiaries while keeping separate accounts for each. PLAN of Arizona is the primary pooled trust organization in Arizona and offers professional management at lower cost than a stand-alone SNT, making it a strong option for smaller trust estates.

Question 9

What are the new special needs trust and ABLE account rules for 2026?

Accepted Answer

In 2026, ABLE account eligibility expanded to people whose disability began before age 46 (was age 26). The SECURE 2.0 Act also clarified that properly structured trusts for disabled beneficiaries may use the lifetime stretch rule for inherited IRAs. The 2026 ABLE contribution limit is $18,000.

Question 10

Can you buy a house with an ABLE account?

Accepted Answer

Yes, housing is a qualified disability expense under the ABLE Act, so ABLE funds can pay for rent, mortgage, utilities, and home modifications. However, shelter payments from ABLE accounts may still reduce SSI by up to the presumed maximum value (~$315/month) under in-kind support rules. A home purchased with ABLE funds used as a primary residence is exempt from the SSI asset test.

Question 11

What are the disadvantages of an ABLE account, and what expenses are not allowed?

Accepted Answer

The main disadvantages of an ABLE account are the $18,000 annual contribution cap, SSI suspension when the balance exceeds $100,000, Medicaid payback at death, and a 10 percent penalty on non-qualified withdrawals. Non-qualified expenses include anything unrelated to the account holder's disability.

Question 12

Who qualifies for an ABLE account under the 2026 eligibility expansion?

Accepted Answer

Starting January 1, 2026, ABLE accounts are available to people whose disability began before age 46, expanded from the prior threshold of age 26. SSI and SSDI recipients qualify automatically. Others can qualify with a physician's certification of a severe, lasting impairment.

Special Needs &Disability Planning

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