Estate Planning for Special Needs Families in Massachusetts

By Matthew P. Albanese

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Estate Planning

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Last Modified on Apr 29, 2026

Families with special needs may have to endure specific, unique struggles that other families simply don’t. It’s always recommended that you have the right kind of asset protection when considering an estate plan, and this is especially true for special needs families. The last thing you want is to lose certain government benefits because you didn’t prepare correctly. Understanding estate planning for special needs families in Massachusetts is vital.

As you work through establishing a special needs trust and devoting effort to maintaining ongoing government benefits, you may want to consider hiring a Massachusetts estate planning attorney to help. The state’s special needs estate planning laws can be complicated, and you don’t want to lose some benefits to get other benefits.

Estate Planning for Special Needs Families in Massachusetts

The most important element of estate planning for special needs families in Massachusetts is determining a way to secure your special needs loved one’s future without compromising their vital public health benefits, such as Medicaid or SSI benefits. In 2022, four out of every 10 people with disabilities in Massachusetts needed to use 30% or more of their income just for housing. The average household income in the state is $103,960 a year.

It’s important that you consider every possibility at your disposal, including special needs trusts and personalized care plans. You should hire an estate planning lawyer to provide you with options for your situation. Here are some of the key elements of special needs estate planning in Massachusetts:

• Special needs trusts. The most reliable way to secure assets for a special needs individual without hurting their current benefits is by establishing a special needs trust (SNT). This document, which is also referred to as a supplemental needs trust, holds assets in trust for a special needs person’s benefit but also does not count against eligibility for current governmental benefits. A special needs trust must be irrevocable, used only for the benefit of the special needs beneficiary, and allow said beneficiary to have all the benefits of government needs-based programs.
• Third-party vs. first-party. There are two main ways that a special needs trust can be funded. Both have their benefits. A good lawyer can help you understand which form of funding would work better for your situation.
• Third-party SNT. This form of SNT is funded by the beneficiary’s parents, grandparents, or others close to them. There is no requirement to pay anything back upon the death of the beneficiary.
• First-party SNT. This form of SNT is funded entirely by the special needs individual’s own assets, including a potential inheritance or legal settlement. A first-party SNT does require Medicaid payback upon the beneficiary’s death.
• Trustee selection. It is absolutely vital that a trusted, loyal trustee be appointed to the special needs trust to manage the funds therein. It’s possible that certain family members or acquaintances may act in a predatory manner towards the SNT in an attempt to access the funds themselves. With a trustee you can rely on, that won’t happen. The trustee can pay vendors directly, manage assets for the special needs individual, and maintain compliance with state and federal regulations.
• Avoid direct inheritance. While leaving money to a disabled individual in your will can be a nice gesture and is likely not done in a malicious manner, the consequences of that decision can be devastating. A direct inheritance can cause the disabled individual to lose their government benefits, including SSI income and MassHealth eligibility. Instead of giving that money directly to your loved one, put it in a special needs trust.

FAQs

What Assets Can Fund a Special Needs Trust?

A special needs trust in Massachusetts can be funded with many different kinds of assets. The ultimate goal of the trust is to help the special needs person without costing them any of their government benefits. Some of the most common assets funding special needs trusts in Massachusetts include cash, investment accounts, real estate, life insurance proceeds, inheritances, retirement benefits, and personal injury settlements.

What Are Common Mistakes to Avoid in Special Needs Estate Planning?

There are many mistakes you can make in special needs estate planning, and hiring an experienced estate planning lawyer is the most reliable way to avoid those mistakes. The most common mistake that’s made is leaving assets to the beneficiary instead of leaving them in a special needs trust. Other mistakes include forgetting to update beneficiaries on life insurance forms or failing to establish a special needs trust entirely.

What Is the Downside of a Special Needs Trust?

While a special needs trust can be of great benefit to the individual it’s made for, they are not without their downsides. SNTs can be expensive to set up and maintain. The beneficiary loses much of their financial independence. Trustees have total discretion over how the funds in the SNT are distributed. Upon the beneficiary’s death, if the trust is funded by a third party, Medicaid is entitled to reimbursement for services provided.

What Is an Alternative to a Special Needs Trust?

One of the most common alternatives to a special needs trust in Massachusetts is an ABLE account. ABLE stands for Achieving a Better Life Experience, and it allows individuals with special needs to save up to $20,000 per year in tax-advantaged investments without losing their government benefits. ABLE accounts can be cheaper and easier to set up than a trust. However, you are limited to how much you can contribute, and the disability must start before age 46.

Hire an Estate Planning Lawyer to Help Today

It can be hard to know what to do to help a disabled loved one. Your first instinct may be noble, but not that helpful. A special needs trust can be the answer, and you should consider looking into it as a viable option to protect your loved one. At Albanese Law, LLC, we can assist you in going through your options and coming up with a plan that benefits your disabled loved one while also protecting them. Contact us to speak with a member of our team.