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Special needs trusts
Special needs trusts that protect benefits and the person
A special needs trust holds an inheritance, settlement, or life insurance payout for a loved one with a disability so that it supplements, rather than replaces, public benefits like SSI and Medicaid. DT Law, in Naperville, Illinois, drafts third-party and first-party (payback) special needs trusts and helps families use ABLE accounts.
What is happening
Benefits such as SSI and Medicaid have strict limits on money and property. A gift or inheritance left directly to a person with a disability can cost them those benefits, even when it was meant to help. This often happens by accident, through a grandparent’s will or a beneficiary form.
What can be done
- A third-party supplemental needs trust, funded by family members, holds money for your loved one without counting against SSI or Medicaid resource limits.
- A first-party (payback) special needs trust holds money that already belongs to your loved one, such as a settlement or an inheritance received directly. It protects eligibility, and the trust repays Medicaid for benefits provided when the beneficiary dies.
- ABLE account guidance. An ABLE account lets eligible people save for disability-related expenses without losing benefits, within annual and balance limits. It can work alongside a trust.
- Coordination with your will or living trust, so assets flow into the trust instead of to your loved one directly.
- A review of beneficiary forms on retirement accounts and insurance, where gifts are most often misdirected.
- A letter of intent that tells future caregivers who your loved one is and what matters to them.
- Guardianship planning and nominations, when your loved one needs support with decisions.
The Special Needs Plan includes a third-party supplemental needs trust. First-party trusts and ABLE accounts are discussed at your consultation. See Services and Pricing for what the plan includes.
Why DT Law
From 2025 to 2026, Yung Truong worked as a Registered Behavior Technician at Westside Children’s Therapy, and before that she practiced Illinois probate and estate planning. That mix shapes documents a family can actually act on and trustees who understand what “supplemental needs” means day to day. Read more about Yung.
Common questions
Can an inheritance really cost my loved one their benefits?
Yes. SSI and Medicaid have limits on the money and property a person may hold. An inheritance, settlement, or life insurance payout left directly to your loved one can push them over those limits. A special needs trust holds the money so it can supplement benefits instead of replacing them.
What is a third-party special needs trust?
It is a trust funded with money that belongs to someone other than the person with a disability, such as a parent or grandparent. A trustee manages it and can pay for supplemental needs, subject to benefit rules.
Do other relatives need to change their wills?
If grandparents or other relatives plan to leave money to your loved one directly, it can affect benefits. They should talk with their own attorney about directing that gift to the trust instead.
What is the difference between a third-party and a first-party special needs trust?
A third-party trust is funded with money that belongs to someone else, such as a parent or grandparent, and usually does not have to repay Medicaid. A first-party trust holds money that belongs to the person with a disability, and it repays Medicaid for benefits provided at the beneficiary’s death. Which one fits depends on where the money comes from.
Do you also help with ABLE accounts?
Yes. An ABLE account lets eligible people save for disability-related expenses without losing benefits, within annual and balance limits. It can work alongside a special needs trust, and we help you decide how the two fit together.
When should we set one up?
Before any inheritance or settlement is finalized, and ideally as soon as a diagnosis is known. Setting it up early also lets you name trustees and write guidance while you are able.
Plan before an inheritance arrives.
A short conversation now can protect your loved one’s benefits and your family’s intentions for years to come.
This page is general information about Illinois law and is not legal advice. It does not create an attorney-client relationship. See the Disclaimer. Last updated October 2026.