What to Know Before Beginning Special Needs Planning

You have spent years thinking about what happens to your child after you are gone. For families with a loved one who has a disability, that question shapes every financial decision and every conversation about what you leave behind.

Without a plan built around your child’s specific needs, the assets you intend as a gift may count against them. A direct inheritance can disqualify a disabled child from Medicaid and SSI overnight, eliminating the benefits they rely on for medical care and daily living.

At East Coast Elder Law, our special needs planning practice serves families across Hampton Roads, Virginia Beach, Norfolk, Chesapeake, Williamsburg, and the Eastern Shore. Shannon Laymon-Pecoraro is a Certified Elder Law Attorney (CELA), one of fewer than 1,000 attorneys in the country to hold that designation, and has developed hundreds of special needs trusts, including provisions for public benefits protections. We know what a plan built around your child’s life looks like.

How Can My Special Needs Child Stay Financially Secure After I Am Gone?

For parents of a special needs child, the goal is not simply leaving money behind. It is leaving it in the right structure. That means coordinating trusts, wills, beneficiary designations, and life insurance policies in a way that preserves government benefits eligibility while still providing for the future.

Supplemental Security Income (SSI) and Medicaid are means-tested programs. Your child’s access depends on keeping their countable resources below specific thresholds. A special needs trust (SNT) holds assets for your child’s benefit without counting them as the child’s own resources under federal benefit rules (42 U.S.C. § 1381 et seq.), protecting both the inheritance and the benefits. Beneficiary designations on retirement accounts, life insurance policies, and other assets should be reviewed carefully and coordinated with the special needs trust so assets do not pass to your child outright by mistake.

What Is a Special Needs Trust?

A special needs trust (SNT) is a legal arrangement that holds assets for a child with disabilities, allowing a trustee to make distributions for supplemental expenses without those assets counting against the child’s eligibility for public benefits.

Why Use a Special Needs Trust?

Without a trust, money left directly to your child counts as a personal resource. Once that resource exceeds the SSI limit, your child loses benefits until the funds are spent down. An SNT keeps those assets off the books for benefit purposes, allowing your child to receive support for therapy, education, medical care not covered by Medicaid, transportation, and other quality-of-life expenses. Third-party trusts funded with your assets require no Medicaid payback at your child’s death and can continue for your child’s lifetime.

What Happens When a Child With Disabilities Inherits Without a Plan?

When a child with disabilities receives assets directly through a will that names them outright, a beneficiary designation on a retirement account, or a life insurance payout, those assets become their personal resource under SSI and Medicaid rules. Once their countable resources exceed the program threshold, they lose benefits until the funds are spent down.

This outcome does not require a large inheritance. It can happen from any direct transfer of assets that was not routed through a properly structured trust. Well-meaning family members who leave money directly to a child with disabilities, or who name that child as a beneficiary on accounts outside the estate plan, can disqualify them from the benefits they depend on for medical care and daily living.

A plan built around your child’s needs prevents this. It routes assets through the right structure, coordinates beneficiary designations, and protects both what you leave behind and the benefits your child already has.

How Do Special Needs Trusts Work?

A trustee manages trust assets and makes distributions based on the terms you establish. The trustee covers expenses your child’s government benefits do not already pay for. Distributions must be supplemental, not a replacement for what Medicaid and SSI already provide.

SNTs fall into two categories based on where the funding comes from. A third-party trust holds assets contributed by parents or other family members and carries no Medicaid payback requirement at the beneficiary’s death. A first-party trust holds assets that belong to the person with disabilities, such as from a personal injury settlement or a direct inheritance received before a trust was established, and is subject to different federal rules.

First-party SNTs, funded with assets belonging to the disabled individual, may require a Medicaid payback provision under federal law. Virginia’s Uniform Trust Code (Title 64.2, Chapter 7) governs the administration of both trust types.

Steps for Effective Special Needs Planning

Special needs estate planning is a coordinated strategy built around your child’s current and future needs.

Assess Your Child’s Current and Future Needs

Document your child’s medical, educational, social, and financial needs. Estimate long-term care costs and identify which government programs your child currently receives or will qualify for.

Consult with a Special Needs Planning Attorney

An attorney with experience in SNTs and estate planning helps you avoid the mistakes that cost families their child’s benefits: gaps in trust coordination, misdirected beneficiary designations, and documents that fail to comply with state law and federal benefit rules.

Create or Update a Special Needs Trust

Drafting an SNT means selecting a trustee, specifying permissible distributions, and structuring the trust in accordance with state and federal laws. The trustee you choose will manage investments and navigate benefit compliance for years or decades; that decision matters as much as the document itself.

Draft or Review Your Will

Your will should direct assets into your child’s SNT through your Will, verify that the SNT is named the beneficiary of any assets you desire to pass to your child outside of probate, and nominate a guardian. Probate delays can disrupt care, so coordination with an attorney who knows Virginia’s estate administration requirements matters.

Appoint Guardians and Trustees

If your child is an adult who cannot make certain personal or medical decisions independently, a court may need to appoint a guardian. Trusteeship is separate and covers management of trust assets. These roles do not need to be filled by the same person and often should not be.

Establish Powers of Attorney and Healthcare Directives

Virginia’s durable power of attorney statute (Va. Code §§ 64.2-1615 et seq.) and advance directive statute (Va. Code §§ 54.1-2981 et seq.) allow you to designate trusted individuals to act on your behalf if you become incapacitated before your child.

Consider Life Insurance and ABLE Accounts

A life insurance policy funds an SNT at your death without triggering a benefits review. ABLE accounts, also known as 529A accounts, can provide a tax-advantaged way to pay qualified disability expenses and are often used to offset in-kind support and maintenance reductions for SSI. When used properly, they can work alongside SSI and Medicaid, although SSI has separate rules for higher account balances

Review and Update Your Plan Regularly

Laws change, and so do your child’s needs and care requirements. Schedule a review after major life events and at minimum every few years.

Communicate Your Plan with Family and Caregivers

Your plan works only if the people carrying it out understand it. Sharing it with family members prevents well-meaning relatives from leaving assets directly to your child and confirms that the people named as trustee and guardian are prepared.

Who Should Be Appointed in a Special Needs Plan?

The people you choose as guardian and trustee will carry out your plan long after you are gone. These decisions deserve as much attention as the legal documents.

What to Consider When Choosing a Guardian

Your child’s guardian makes personal and medical decisions on their behalf. Look for someone who is reliable, genuinely committed to your child’s well-being, comfortable navigating healthcare systems, and willing to serve long-term.

What If You Die Before Nominating a Guardian for Your Child?

If a guardianship is needed and no one has been nominated in your planning documents, a Virginia court will decide who should serve. Naming your preference can give the court valuable guidance, but the appointment itself remains a court decision.

Why Choose East Coast Elder Law for Your Child’s Special Needs Planning?

Special needs planning requires an attorney who understands the intersection of federal benefit law, Virginia trust law, and the practical realities of caring for a child with disabilities. Shannon Laymon-Pecoraro is a Certified Elder Law Attorney, a national speaker at Stetson University School of Law’s Special Needs Trust Conference, and a board member of Hope House Foundation and the Autism Society. She has developed hundreds of settlement trusts with public benefits protections and has over a decade of experience in elder law and special needs planning. We offer free consultations with no obligation, are available evenings and weekends during active client situations, and customize every plan to your child’s specific circumstances.

Client Testimonials

“After relocating to Virginia Beach, we needed to update our Estate Plan. A review of the VA CELA, Certified Elder Law Attorney, website showed Attorney Shannon A. Laymon-Pecoraro of East Coast Elder Law was one of only a few attorneys in the area with the certification. We met with Shannon for a consultation and decided to go forward with an estate plan. We are very pleased with the legal services provided and look forward to a long term relationship. We also have had a great working relationship with Paralegal Skylar and Legal Assistant Felicia. Congratulations on developing a new law firm aimed at addressing the people’s needs.” — Michael G.

“I cannot say enough about Shannon Laymon-Pecoraro and the entire Eastcoast Elder Law Team. Shannon has demonstrated a high level of expertise in elder law, including estate planning, Medicaid, and special needs for my dad. It has been an extremely lengthy and difficult process getting Medicaid approved, deeds transferred, trusts set up and assets protected for my family. There have been many times over the past one & a half years I have been an emotional train wreck and at my wits end with EVERYTHING! Many late night texts & emails back & forth with Shannon. Nomatter how bad it’s been & trust me it’s been bad, Shannon has ALWAYS had my back, calmed my nerves and put the broken pieces back together and given me the strength to move forward. With her endless hours of commitment and dedication I can honestly say I don’t what I would have done without her help. Thank you for putting up with me thru this roller coaster ride! I consider you and your staff THE BEST of the BEST!” — Barbara P.

“It was a pleasure working with Attorney Shannon A. Laymon-Pecoraro of East Coast Elder Law and her TEAM to finalize our estate and trust planning. Their knowledge and expertise with the legal documents, identified important details we hadn’t considered and offered invaluable guidance. Their outstanding professionalism, clear communication, and genuine interest in our wishes gave us confidence that our future and our family’s well-being are secure. We truly appreciate their thorough approach and highly recommend their services to anyone seeking peace of mind. Again, thank you East Coast Elder Law TEAM!!!” — Larena A.

Common Questions About Special Needs Planning

What Is the Best Trust for a Disabled Child?

For most families, a third-party special needs trust offers the most flexibility: no Medicaid payback at death, funded with your assets, and structured to cover a wide range of supplemental expenses. A first-party SNT applies when the trust is funded with assets belonging to the child, such as from a personal injury settlement. The right structure depends on your family’s specific situation and funding source.

What Financial Tools Can Support Special Needs Planning?

Several tools work alongside a special needs trust. ABLE accounts are tax-free accounts for disability-related expenses that do not affect SSI or Medicaid eligibility. Life insurance funds the SNT at the parent’s death. Savings and investment accounts held within the trust give the trustee resources to cover supplemental needs. Each tool must be coordinated carefully to avoid unintended loss of government benefits.

How Can I Coordinate My Plan with Government Benefits?

Assets intended for your child should flow into an SNT, not to your child directly. Trust distributions should cover expenses that Medicaid and SSI do not, avoiding the types of payments that can reduce monthly benefits, specifically direct food and housing costs. Navigating Medicaid planning while preserving assets requires ongoing attention as laws and your child’s needs change. An attorney who understands Virginia’s disability benefits regulations can help you stay current.

When Should I Start Special Needs Planning?

The answer is as soon as possible. Planning near your child’s diagnosis gives you time to build the right structure rather than reacting in a crisis.

How Can a Special Needs Planning Attorney Help?

An attorney experienced in Virginia elder law and special needs planning drafts the documents, coordinates the trust with your will and beneficiary designations, advises on benefit compliance, and confirms the plan holds up as circumstances change. Protecting settlement funds for minors is one example of the high-stakes planning that requires both legal document knowledge and a thorough understanding of the benefit systems those documents interact with.

Talk to a Virginia Special Needs Planning Attorney Before You Wait

Your child’s financial security and benefits eligibility are too important to leave to a generic estate plan. We offer free consultations with no obligation, and we are available evenings and weekends when families need us most. Reach us at 757-734-7584 or complete our contact form to schedule a conversation with Shannon. Every plan we build is customized to your family’s specific situation.