Families who care for children or adults with special needs face a unique set of responsibilities. While providing emotional and physical care is a daily focus, it’s equally important to plan for the future—especially for the time when parents or primary caregivers are no longer able to provide direct support. Estate planning offers the legal and financial tools necessary to protect your loved one’s well-being, maintain access to vital government benefits, and ensure a secure, fulfilling future.
At Horn & Johnsen SC, we specialize in creating customized estate plans for Wisconsin families, including those with a member who has a disability. Our goal is to provide peace of mind through proactive planning, compassionate counsel, and strategic legal solutions tailored to your family’s unique needs.
Why Estate Planning Matters for Special Needs Families
Estate planning plays a crucial role in securing long-term support for individuals with disabilities, especially when they rely on government assistance programs such as:
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Supplemental Security Income (SSI)
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Medicaid (BadgerCare in Wisconsin)
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Housing assistance
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Vocational rehabilitation services
These programs have strict income and asset limitations. An inheritance, monetary gift, or settlement—even if well-intentioned—can unintentionally disqualify a special needs individual from benefits, leading to significant disruptions in care and housing.
By using special needs trusts and other tools, families can provide financial resources for their loved one without affecting eligibility. Proper planning allows you to preserve critical benefits while enhancing quality of life. It also helps avoid court intervention, family disputes, and uncertainty about future caregiving arrangements.
Key Estate Planning Tools for Special Needs
1. Special Needs Trusts (SNTs)
A Special Needs Trust is the foundation of any estate plan designed for a person with disabilities. This trust allows you to set aside money to pay for “supplemental needs” that improve the beneficiary’s quality of life—things like therapy, technology, education, transportation, entertainment, and personal care—without counting as a financial asset that affects benefit eligibility.
Types of Special Needs Trusts:
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First-Party SNT:
Created using the beneficiary’s own assets, such as an injury settlement or direct inheritance. These trusts are often established by a parent, grandparent, legal guardian, or the court. They must include a Medicaid payback provision, which requires any remaining assets to be used to reimburse Medicaid upon the beneficiary’s death. -
Third-Party SNT:
Funded by someone other than the beneficiary (typically a parent or relative). These are more flexible and ideal for estate planning purposes. Because the assets never belonged to the beneficiary, there is no Medicaid reimbursement requirement, allowing any leftover funds to go to other family members or charities. -
Pooled Trusts:
Managed by nonprofit organizations, pooled trusts combine the resources of multiple beneficiaries for investment purposes while keeping individual sub-accounts. These are a cost-effective solution when the estate is modest or when professional trust administration is needed.
A properly drafted and funded SNT ensures that your loved one receives ongoing financial support while preserving eligibility for public assistance.
2. Letter of Intent
A Letter of Intent (LOI) is a vital companion document to your estate plan. While it’s not legally binding, it provides caregivers and trustees with detailed personal information about the beneficiary’s needs, preferences, and daily routines.
It can include:
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Medical history and provider contacts
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Medication schedules and allergies
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Dietary restrictions and food preferences
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Favorite hobbies, social preferences, and daily activities
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Educational goals and achievements
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Long-term care wishes
This document offers peace of mind that future caregivers will understand your loved one as an individual, not just a name on paper. It helps maintain continuity in care and preserves the routines that contribute to your family member’s comfort and happiness.
3. Guardianship and Powers of Attorney
When a child with special needs reaches the age of 18 in Wisconsin, they are legally considered an adult—even if they are not capable of making independent decisions. Families must plan ahead for this transition to ensure proper legal authority for managing healthcare, education, and finances.
Options include:
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Guardianship:
If your loved one lacks the capacity to make informed decisions, you may petition the court to be appointed as their legal guardian. This gives you authority over healthcare, living arrangements, and other personal decisions. -
Durable Power of Attorney:
If your loved one has sufficient mental capacity, they can sign a power of attorney to name someone they trust to manage financial or medical decisions on their behalf. This is less restrictive than guardianship and allows more independence.
Evaluating which option is appropriate depends on your family member’s cognitive and emotional capabilities, and our attorneys can help guide that determination with sensitivity and care.
4. ABLE Accounts
ABLE (Achieving a Better Life Experience) accounts offer another important planning option for individuals with disabilities. These accounts allow eligible individuals to save up to $18,000 per year (as of 2025) in a tax-advantaged account without affecting their SSI or Medicaid eligibility. The funds can be used for:
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Housing
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Transportation
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Health and wellness services
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Assistive technology
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Job training
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Legal fees
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Education
ABLE accounts are easy to manage and a useful supplement to a special needs trust. They empower individuals with disabilities to have more control over their financial lives while still receiving essential government support.
Common Mistakes to Avoid
Planning for a loved one with special needs is complex, and even small missteps can have serious consequences. Here are some of the most common mistakes we see:
1. Leaving Assets Directly to the Beneficiary
An inheritance, life insurance payout, or direct gift may seem generous, but it can cause the beneficiary to exceed the asset limit for SSI or Medicaid. Always use a Special Needs Trust to receive and manage such assets.
2. Failing to Plan Beyond Parents’ Lifetimes
Many families focus on immediate needs without considering who will care for their loved one in the future. Your plan should identify successor guardians, alternate trustees, and provide instructions for caregiving transitions.
3. Outdated or Missing Beneficiary Designations
If your retirement accounts, life insurance policies, or savings name your child directly—or list no beneficiary at all—it can bypass your estate plan entirely. Always review these documents and update them to name your trust.
4. Procrastination
Waiting too long to plan can lead to unnecessary court involvement, loss of benefits, or confusion among surviving family members. Early planning allows for more options, greater control, and less stress for everyone involved.
How Horn & Johnsen SC Can Help
At Horn & Johnsen SC, we bring decades of experience in estate planning and a deep understanding of the challenges that special needs families face. Our attorneys work closely with clients to design comprehensive, individualized plans that provide long-term protection and peace of mind.
We offer:
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Drafting and funding of Special Needs Trusts
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Establishment of ABLE accounts and guidance on their use
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Guardianship petitions and alternatives
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Coordination with care providers and financial professionals
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Education through estate planning workshops and community events
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Ongoing support for trust administration and plan updates
We don’t believe in one-size-fits-all solutions. Every family deserves a plan that reflects their values, goals, and unique circumstances.
Final Thoughts
Estate planning for families with special needs members is an act of love, foresight, and advocacy. It ensures that your loved one will continue to be supported, protected, and empowered—even after you’re no longer there to provide for them.
If you’re ready to begin creating a thoughtful estate plan tailored to your family, Horn & Johnsen SC is here to help. Contact us today for a free consultation and start the journey toward lasting peace of mind.
