If you’ve spent any time researching Special Needs Trusts online or talking with friends, family members, or even professionals, you’ve probably heard a lot of advice. Some of it is helpful, some not. We regularly meet parents who have been told their child can never inherit money, that an ABLE account replaces a Special Needs Trust, or that government benefits will cover everything their child will ever need. The reality is that Special Needs Planning is filled with myths, half-truths, and well-intentioned misinformation. We’ve gathered some of the most common misconceptions we hear and explain what families really need to know.
Myth #1: “A Special Needs Trust can hold all funds intended for my child.”
Not exactly. A Special Needs Trust can only hold funds provided by others, not funds provided by or owned by your child. This issue comes up when families learn of a problem with SSI benefits or we discover it while reviewing a client’s plan. For example, your child’s SSI, SSDI, 529, UTMA and / or wages should never be deposited into his or her third party Special Needs Trust. Doing so will violate Social Security rules – but fortunately, these situations can often be corrected when identified early.
Myth #2: “I can leave money to my other children, and they can use it to take care of their sibling, so we really don’t need a Special Needs Trust.”
Maybe, but not advisable. While we have no doubt that your other children are trustworthy, this approach can become messy quickly. What if your other child/children divorces, dies, has financial challenges, or other creditor exposure? The funds you have left for your child are now at risk without a way to recover those funds. It can please an enormous burden on a sibling who may already be balancing their own family, career, and financial responsibilities. Remember that a Special Needs Trust also includes a life plan, empowers others to act on behalf of your child, and provides a structured mechanism for protecting your child’s future care, finances, and government benefits.
Myth #3: “I must place funds in the Special Needs Trust as soon as it has been created.”
Usually not. There isn’t a legal requirement to deposit funds into the Special Needs Trust immediately, though some families choose to. In many cases, parents create the trust now, so they can fully design a detailed plan, but fund it later through beneficiary designations, life insurance, retirement accounts, and/or an Estate Plan. By having an executed Special Needs Trust, others can also designate the trust as a beneficiary in their own Estate Plans.
Myth #4: “An ABLE account and a Special Needs Trust do the same thing.”
Not exactly. While a Special Needs Trust and an ABLE account both allow saving for a person’s future, the type of funds each can hold, fund limitations, qualifications, and purpose are quite different. Special Needs Trusts can hold unlimited funds with no contribution limits; ABLE accounts can accept $20,000 annually (2026) in contributions, and when the account balance reaches $100,000, SSI eligibility is lost. Special Needs Trusts cannot hold the individual with a disability’s funds; if it does, it will run afoul of the resource rules, as described above in #1. ABLE accounts, however, are established primarily to hold the individual’s funds whether from wages, SSI or SSDI funds, or gifts. Anyone can establish a Special Needs Trust; the beneficiary does not have to have a proven disability. However, to open an ABLE account, a person must have a disability as confirmed by Social Security Administration or a physician’s certification that the individual has a qualifying disability that began before age 46. Finally, parents can designate remainder beneficiaries in a Special Needs Trust, but that option is usually limited in an ABLE account; remaining funds can be subject to a Medicaid lien. Note that many families benefit from having both an ABLE account and a Special Needs Trust because each serves a different purpose.
Myth #5: “Only Medical Expenses can be paid from a Special Needs Trust.”
Many other expenses can be paid from a Special Needs Trust, medical expenses are only one of them. You can think of a Special Needs Trust as a “quality of life” trust, where most expenses intended to improve a person’s quality of life are allowed. For example, trust funds can be used to pay for recreation, vacation, electronics, hobbies, education, transportation, a car, personal items, therapies, a home, and many other expenses that improve quality of life.
Myth #6: “Special Needs Trusts are only for people with severe disabilities.”
Not exactly. There are many reasons to establish a Special Needs Trust that have nothing to do with the severity of a person’s disability. For example, if the person receives government benefits, needs help managing money, advocacy, healthcare, or will need support systems in the future when parents are deceased, a Special Needs Trust may be one of the most important planning tools available.
Myth #7: “Only wealthy families need Special Needs Trusts.”
This is one of the most common misconceptions we hear. If your child receives government benefits like SSI or Medicaid, and you plan to pass more than $2,000 in assets to your child someday, he or she needs a Special Needs Trust. Supplemental Security Income (SSI) and Medicaid provide cash monthly benefits and the home-based waiver and/or Community Integrated Living Arrangements (CILA). Both of these benefits have strict asset and income limitations. Special Needs Trusts allow a person to receive an inheritance, even relatively modest assets, such as a life insurance policy or inheritance from grandparents, can create eligibility problems if proper planning is not in place.
Myth #8: “My child doesn’t need funds because the state will provide what they need when I die.”
Remember, we do live in Illinois! Even if your child qualifies for every government benefit possible, he or she will still have needs and expenses that are not covered by the state. For example, outings, hobbies, trips, special recreation, a house or condominium, car, rideshare transportation, entertainment, electronics, therapies, cell phones, devices, are just a few items that are not covered by the state but can be paid from a Special Needs Trust. Government Benefits are intended to provide a foundation of support, not necessarily the extras that make life enjoyable and meaningful.
Myth #9: “I hesitate to create a Special Needs Trust because it’s irrevocable, and I won’t be able to make changes to it.”
Usually not. Most Special Needs Trusts created as part of a parent’s estate plan are revocable, meaning changes can be made during the parent’s lifetime. Certain types of Special Needs Trusts must be irrevocable, but those situations are the exception rather than the rule.
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Planning for your child already feels overwhelming. We know how confusing it can be, especially when you receive completely different advice from well-meaning friends, professionals, Facebook groups, and other parents. Every individual with a disability is different, every family has different goals, and every plan should be tailored to those unique circumstances.
At the end of the day, a Special Needs Trust is about much more than protecting an inheritance or preserving government benefits. It is about creating a roadmap for the future. It provides guidance for future caregivers, creates a system of support, and helps ensure that resources will be available to enhance your child’s quality of life for years to come. Most importantly, it gives parents something that is often hard to find in this journey: peace of mind. With the right information and thoughtful planning, you can feel confident knowing you’ve taken meaningful steps to protect the person you love most.
— KC