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, such as mental health disabilities, are eligible to receive financial assistance from the government through programs such as Supplemental Security Income (SSI), Medi-Cal (Medicaid), HUD Section 8, In-Home Support Services and CalFresh. These government aid plans are based on financial need and have strict income eligibility requirements, however. 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.

A hypothetical example:  A couple has three adult children who will divide a $600,000 estate after both parents have died. One of the children is receiving SSI benefits due to a mental health disability. This adult child has problems managing money, so the parents are Representative Payees for the benefits. If the couple sets up a traditional will or trust distributing everything equally among their children, their disabled child may have major financial issues. He or she will inherit about $200,000, which is far above the asset limits set by SSI. They will be disqualified from this program and receive no further benefits. If the child spends their inheritance, not only will they have no assets, they may also have a tough time getting back onto SSI.

The purpose of a “Special Needs Trust” 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 could not want to give cash directly to the child, as such payments are counted as income against SSI, 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), although paying for such “basic needs” will trigger a reduction in SSI benefits. Assets owned by the trust can include money, property, stocks and bonds, child support, and monetary legal settlements, 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 and look for someone who specializes in Special Needs Trusts). 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 have a disability that began before you turned 26, you can open 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 to 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.
Expert Resources

For more information about CalABLE account eligibility, rules and benefits, see CalABLE webite for California. Here is CalABLE Fact Sheet.

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

When you compare ABLE programs, think about the following questions¹:

  • How easy is it to put money in the account and take money out for qualifying expenses? For example, does it come with a debit card?
  • How good is customer support? Try calling the program to see whether it seems helpful.
  • What investments does it offer? Each state program offers different investment options. Choose a program that offers investments matching your needs.
  • What fees does the program charge? There may be fees for opening the account and for keeping money in it.
  • Does the program offer any extra benefits for people living in your state? For example, some state programs offer extra tax benefits for residents of that state.

Note: You can switch your ABLE account from one state program to another. You do not have to stick with the state program you choose.

Ref: ¹Disability Benefits 101

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 these asset protection tools have different advantages.

Advantages of ABLE accounts:

  • Tax benefits
  • 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:

The bottom line: Because of the $14,000 annual limit on contributions to an ABLE account, you cannot replace a trust with an ABLE account. Instead, consider using 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 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.

Expert Resources

To obtain local WIPA services, you must work with an SSA Certified Work Incentive Counselor. For Santa Clara County (and Santa Cruz, San Francisco, or Marin Counties), contact Kate Brune at (650)-645-1780 ext. 117, or email  *Note: Below is a handout from “The WIPA Program” presentation given by Kate Brune to the NAMI SCC Consumer Advisory Council July 26, 2016.

The “WIPA Program” PowerPoint 7/26/2016 presentation
(Back to Top)