How Will My Special Needs Child's Expenses Be Paid?

You may be paying for your child's housing, therapies, transportation, medical needs, and everyday expenses now. But who will cover those costs when you no longer can? Your child's future expenses may be paid through a combination of government benefits, family resources, special needs trusts, and an ABLE account. How those resources are arranged matters because receiving money in the wrong way can affect eligibility for means-tested benefits. 

At KC Estate & Special Needs Planning, we help families in Kansas City plan for the financial needs of loved ones with disabilities. We can help identify available resources, how they can work together, and how to structure a plan without unintentionally interfering with important benefits. 

SSI and Medicaid Can Help Cover Expenses 

Supplemental Security Income (SSI) and Medicaid can provide an important financial foundation for an eligible person with disabilities, but they may not cover all of your child's future expenses. 

SSI is a needs-based program. In 2026, an individual generally cannot have more than $2,000 in countable resources and remain eligible for SSI. Not every asset counts toward that limit, but cash, bank accounts, investments, and other resources may count. 

The rules also change when a child reaches adulthood. Before age 18, Social Security may treat some of a parent's income and resources as belonging to a child who lives with the parent. This is called deeming. According to the Social Security Administration's guidance on parental deeming, deeming stops the month after the child turns 18. A young adult who could not qualify for SSI because of parental income or resources may therefore become eligible after turning 18 based on their own financial circumstances. 

The change at 18 also makes household arrangements important. If your adult child receives SSI and lives with you without paying their share of shelter expenses, Social Security may treat that support as income and reduce the SSI payment. Paying an appropriate share of household shelter expenses can affect that calculation. 

Medicaid can provide health coverage and other services to eligible people with disabilities. In the Kansas City area, Missouri's Medicaid program is MO HealthNet, while Kansas administers Medicaid through KanCare. Eligibility and available services depend on the applicable program and individual circumstances. 

Third-Party Trusts Can Hold Family Assets

A third-party special needs trust can hold assets contributed by parents, grandparents, or other people rather than transferring those assets directly to your child. 

The distinction matters because the trustee, not the beneficiary, controls and administers trust property under the trust's terms. When properly structured and administered, a third-party special needs trust may provide additional support without the trust property necessarily becoming a countable SSI resource. 

Unlike a first-party special needs trust, a third-party trust funded entirely with other people's assets generally is not subject to the federal Medicaid payback requirement. Remaining assets can instead pass according to the trust's terms. 

A trust may also receive assets after a parent's death. Beneficiary designations and estate documents therefore need to work with the trust. Naming your child directly on a will, life insurance policy, retirement account, or other asset can have very different consequences from directing appropriate assets to a properly established trust. 

Retirement accounts require particular care because special distribution rules may apply when the beneficiary is disabled or chronically ill, and the beneficiary designation must be coordinated with the special needs plan. 

First-Party and Pooled Trusts Can Hold Your Child's Assets

Sometimes the money already belongs to the person with disabilities. A personal injury settlement, accumulated funds, or an inheritance that passed directly to your child can create a different planning problem. 

Federal law provides exceptions for certain trusts funded with the beneficiary's own assets. These include qualifying first-party special needs trusts under Section 1917(d)(4)(A) of the Social Security Act and pooled trusts under Section 1917(d)(4)(C). The Social Security Administration's trust guidance identifies both as exceptions to its general rules for trusts funded with an SSI recipient's assets. 

A first-party special needs trust under Section 1917(d)(4)(A) must be established for a person with disabilities who is under age 65. Pooled trusts do not have the same age restriction, although transferring assets to a pooled trust at age 65 or older can raise Medicaid transfer-of-assets issues. 

These trusts have requirements that differ from third-party trusts. A qualifying first-party special needs trust must provide for the state Medicaid agency or agencies to receive reimbursement from remaining trust assets after the beneficiary's death, up to the amount of qualifying Medicaid assistance paid on the beneficiary's behalf. Pooled trusts are established and managed by nonprofit associations, with individual beneficiary accounts pooled for investment and management purposes. 

Which type of trust is appropriate therefore depends partly on whose money is funding it. 

This is why estate and special needs planning involves more than establishing a trust. Families need to consider how the trust will be funded, who will administer it, what expenses it may pay, and how distributions can interact with the beneficiary's public benefits. 

ABLE Accounts Can Cover Disability Expenses

An ABLE account gives an eligible person with a disability another way to save and pay qualified disability expenses while receiving favorable tax treatment. 

Qualified disability expenses can include housing, education, transportation, employment support, health care, assistive technology, personal support services, financial management, and other expenses related to the person's disability. Beginning in 2026, the disability generally must have begun before age 46 rather than before age 26 for the person to meet the age-of-onset requirement. 

The standard annual ABLE contribution limit is $20,000 in 2026, although an eligible beneficiary who works may be able to contribute additional funds under separate rules. For SSI purposes, up to and including $100,000 in an ABLE account is excluded from the account owner's countable resources. This makes an ABLE account particularly useful when compared with the ordinary $2,000 SSI resource limit. 

Kansas residents can use the Kansas ABLE Savings Plan, while Missouri residents can use MO ABLE. An ABLE account and a special needs trust can also serve different purposes within the same financial plan. 

Families should understand what may happen to money remaining in an ABLE account after the beneficiary dies. A state may file a claim for certain Medicaid assistance provided after the ABLE account was established, subject to federal requirements and applicable state rules. This is one factor to consider when deciding how much money to place in an ABLE account rather than another planning vehicle. 

Plan for Your Child's Future with KC Estate & Special Needs Planning

The central question is not simply how much money you can leave your child. It is how SSI, Medicaid, your own assets, special needs trusts, and an ABLE account can work together so that one source of financial support does not unintentionally undermine another. 

At KC Estate & Special Needs Planning, we can help you determine which resources can fund your child's future expenses and how to structure them. Talk with our Kansas City special needs planning attorney about building a funding plan around your child's benefits, anticipated expenses, and long-term needs.