Special Needs Trust Attorney & CPA — Orland Park and Chicago Southwest Suburbs

Families with a disabled child, sibling, or other loved one face a unique estate planning challenge: how to provide financial support without disqualifying that person from the government benefits — Medicaid, SSI, and others — they depend on to survive.

A Special Needs Trust — also called a Supplemental Needs Trust — is the primary legal tool designed to solve this problem. When properly drafted and administered, a special needs trust allows a disabled person to receive financial support from family without triggering the income and asset limits that govern SSI and Medicaid eligibility.

As an Attorney and Certified Public Accountant serving Orland Park, Tinley Park, Orland Hills, Mokena, and the broader Chicago southwest suburbs, Paul Lechner provides integrated special needs planning that addresses both the trust document and the tax and benefits implications of funding it.

Schedule a Consultation  Call (708) 460-6686

Types of Special Needs Trusts

Third-Party Special Needs Trust

A third-party special needs trust is funded with assets belonging to someone other than the beneficiary — typically parents, grandparents, or other family members. This is the most common type and the most flexible. A third-party SNT can be created during the grantor's lifetime (a standalone trust) or through a will or revocable living trust (a testamentary trust that takes effect at death). Critically, a third-party SNT is not subject to the Medicaid payback requirement that applies to first-party trusts — when the beneficiary dies, remaining trust assets pass to family members or other beneficiaries rather than to the state.

First-Party (Self-Settled) Special Needs Trust

A first-party SNT — also called a (d)(4)(A) trust after the federal statute that authorizes it — is funded with assets belonging to the disabled person. This typically arises when a disabled person receives an inheritance outright, a personal injury settlement, or another lump sum. To preserve Medicaid eligibility, those assets must be placed into a compliant trust. First-party SNTs must be established before the beneficiary turns 65, require a parent, grandparent, guardian, or court to establish them, and are subject to a Medicaid payback provision upon the beneficiary's death.

Pooled Special Needs Trusts

A pooled trust is managed by a nonprofit organization that pools the assets of multiple beneficiaries for investment purposes while maintaining separate accounts for each. Pooled trusts can be funded by either third parties or by the disabled person's own assets, and are available for individuals of any age. They are often the most practical option when the amount of assets is too small to justify the cost of a standalone trust.

What a Special Needs Trust Can and Cannot Pay For

The trustee of a special needs trust must be careful to use trust funds only for goods and services that supplement — not replace — government benefits. Distributions for food and shelter (rent, mortgage payments, utilities) can reduce SSI benefits dollar-for-dollar under the in-kind support and maintenance rules. Distributions for most other purposes — education, recreation, transportation, personal care items, electronics, vacations, and supplemental therapies not covered by Medicaid — generally do not affect benefits eligibility.

This makes proper trustee selection and ongoing trust administration critically important. A trustee who is unfamiliar with these rules can inadvertently reduce or eliminate the beneficiary's government benefits through well-intentioned but improper distributions.

ABLE Accounts

The Achieving a Better Life Experience (ABLE) Act, enacted in 2014, created tax-advantaged savings accounts for individuals with disabilities who were disabled before age 26. ABLE accounts allow disabled individuals to save up to $18,000 per year (2024 limit, indexed for inflation) without affecting SSI and Medicaid eligibility, as long as the account balance does not exceed $100,000. Funds in an ABLE account can be used for qualified disability expenses including education, housing, transportation, health, employment training, and financial management.

ABLE accounts can be an effective complement to a special needs trust, particularly for expenses that the SNT cannot easily pay for or for giving the disabled person greater day-to-day financial independence. We help families evaluate whether an ABLE account, a special needs trust, or a combination of both best serves their situation.

Coordinating the Special Needs Trust With Your Overall Estate Plan

Creating a special needs trust is not a one-time event — it requires coordination across your entire estate plan. Parents of a disabled child must review and update their wills, revocable living trusts, beneficiary designations on IRAs and life insurance policies, and any existing estate plan documents to ensure that no assets pass directly to the disabled beneficiary at their death. A direct inheritance — even of a small amount — can trigger a review of the beneficiary's SSI and Medicaid eligibility.

We also help families think through the guardian and trustee selection process. The person best suited to care for a disabled family member is not always the person best suited to manage a trust, and these roles can be split between individuals or between an individual and a corporate trustee.

Related Services

• Estate Planning — wills, revocable living trusts, powers of attorney, and Medicaid planning
• Tax and Financial Planning — tax-efficient funding of special needs trusts using life insurance or other assets
• Probate and Trust Litigation — representing trustees and beneficiaries in trust administration disputes

For more information contact Paul Lechner, Esq., CPA at (708) 460-6686 or schedule a consultation online.