The information on this page is intended as a general introduction to “asset protection” tools, such as Special Needs Trusts, ABLE Savings Accounts, and the WIPA work incentive program. Setting up special trusts and accounts, or at a job under social security rules, can be a complicated process. Read the information carefully, and consult the Expert Resources recommended under each topic.


What are Special Needs Trusts

Many people with special needs, including mental health disabilities, receive financial assistance from the government through programs such as Supplemental Security Income (SSI), Medicaid, HUD Section 8, In Home Support Services and CalFresh. However, these government aid plans are based on financial need and have strict income eligibility requirements. (Note that California’s version of Medicaid [Medi-Cal] now has no asset limit.). If the person receives a large amount of money (from an inheritance for instance), they can be disqualified from such needs-based programs.  For the family members of a special needs individual, careful estate planning is essential to preventing such an outcome.

The purpose of a Special Needs Trust (SNT) is to preserve government benefits for disabled beneficiaries. Instead of leaving assets directly to the disabled adult child, families can establish a “Third Party Special Needs Trust” in their living trust or wills. This trust would not be under the control of the child but would be managed by an independent trustee named by the parents and would continue for the lifetime of the child. (This is known as a “Third Party Special Needs Trust” because the beneficiary has no control over the trust.)

This type of trust prevents the beneficiary from controlling their inherited assets, but also provides a means for parents to ensure their disabled loved one receives financial support even after their deaths. The trust can own assets that are used but not “owned” by the beneficiary, and so do not count against needs-based government aid. The trustee cannot give cash directly to the child, as such payments are counted as income against SSI and other benefits, but they can pay for expenses such as utilities, transportation, education, recreation, etc. The trust may pay for food and rent (or own a home in which the beneficiary resides) but paying for such “basic needs” will trigger a reduction in SSI benefits. Assets owned by the trust can include cash, real and personal property, stocks and bonds and life insurance proceeds, and other family members and friends can also contribute money and assets to the trust.

Expert Resources

For more information on Special Needs Trust funds in California, see Building Your Assets and Wealth: The Details by Disability Benefits 101. Families who think they need such an estate planning arrangement should consult an attorney with experience preparing Special Needs Trusts. Also, families who want to hire an experienced Professional Fiduciary to administer a Special Needs Trust can go to the Professional Fiduciary Association of California website (click on the Fiduciary Search link, select or enter your location, and check “Special Needs Trust Administration” under Fiduciary Specialty). The following books are also recommended:

(Back to Top)

What are ABLE Accounts

ABLE accounts are tax-advantaged savings accounts for persons with disabilities. California’s ABLE account program is called CalABLE. If you (or your loved one) have a disability that began before age 26, consider an ABLE account. Advantages are:

  • Savings and tax advantages – Money saved in ABLE accounts is not taxed as long as money taken out of the account is used for “qualified disability expenses.”  Also, friends and family can contribute to your ABLE account.
  • Preserving your benefits – You can save up to $100,000 in your ABLE account without affecting your SSI benefits (ABLE savings do not count against the SSI $2,000 asset limit.) Also, the money saved in an ABLE account does not affect CalFresh eligibility.
  • Flexible spending – You can use your ABLE savings for many “qualifying expenses,” such as housing, education, transportation, legal fees, etc.

You can choose to open an ABLE Account in another state’s ABLE program. You can compare different State ABLE account programs to see which one best fits your needs.

Expert Resources

For more information about CalABLE account eligibility, rules and benefits, see CalABLE website for California. Good sources of information about ABLE accounts in general are:

What are the differences between Special Needs Trusts and ABLE Accounts?

If you already have a Special Needs Trust, it’s a good idea to open an ABLE account as well, because trusts and ABLE accounts have different advantages.

Advantages of ABLE accounts:

  • Provides tax benefits (as long as any money withdrawn is spent on qualified disability expenses)
  • Easier (and cheaper) to open
  • Easier to use the money in the account
  • The person with a disability has more control over the account
  • Money from an ABLE account used for housing expenses doesn’t make SSI benefits go down

Advantages of Special Needs Trusts:

  • No limits on contributions
  • Does not require that your disability began before you turned 26
  • The money in a Special Needs Trust does not have to be spent on qualified disability expenses

The bottom line: Because of the limits on how much can be put into an ABLE account each year, you cannot replace a trust with an ABLE account. Instead, use them both as part of your overall asset-building strategy.

(Back to Top)

The Work Incentive Planning & Assistance (WIPA) Program

Many people receiving Social Security disability benefits (SSI and/or SSDI) would like to work but are worried that they will lose their benefits if they earn an income. The Work Incentive Planning & Assistance (WIPA) Program is a FREE service offered by the Social Security Administration to help those on SSI/SSDI to make informed choices about working. This program is for individuals currently receiving disability benefits who are considering work, seeking work, self-employed, or currently employed. WIPA will provide you with information about work incentives which may allow you to keep some or all of your cash benefits as well as your medical benefits. If you would like general information about how work might affect your benefits, you can call the Ticket to Work Help Line at 866-968-7842 Monday through Friday from 8am – 8pm.

To obtain local WIPA services, you must work with an SSA Certified Community Work Incentive Coordinator. For Santa Clara County (and other Bay Area counties), these counselors are available at the Center for Independence of Individuals with Disabilities (CID). To request WIPA services, go to their Work Incentive Planning & Assistance (WIPA) page and click on the “Email Us to Request More Information” button.

(Back to Top)