Special needs planning: Advisors fill gaps families face at 18 and 22

Nearly half of parents raising a child with special needs say their finances are in fair or poor shape, yet most are planning without an advisor. That gap is moving special needs planning higher on practice agendas as families weigh government benefits, trusts and care decisions that can span decades.

Guardian Life Insurance Co. of America’s report Your Plan, Their Possibilities, produced with Annette Hammortree, owner and CEO of Hammortree Financial Services in Crystal Lake, Illinois, found that 43% of caregivers to a child with special needs rate their financial health as fair to poor. According to the report, only 33% of those caregivers work with a financial advisor, and just one in four has a will. Guardian estimates that roughly 19 million children in the US have special health care needs. 

For wealth managers, those figures describe families who need help on three fronts at once: preserving eligibility for Supplemental Security Income and Medicaid, funding care that may last a lifetime, and keeping the parents’ own retirement on track. Like other family caregivers who face broader money setbacks, these parents often put their own needs last, and special needs planning extends well beyond choosing the right account.

Why the years after 22 strain household income

Hammortree, herself the parent of a young adult with multiple disabilities, said the first hurdle for many families is finding services. Schools typically provide resources until a child turns 22, she said, but access becomes much harder after that. Often one parent then cuts back or leaves work to provide care, sharply reducing household income. 

“Although government benefits may become available when the adult child reaches adulthood, those benefits often do not fully offset the family’s lost earnings. Advisors can help families maximize available benefits, develop a long-term financial plan, and prepare for future care needs while protecting the family’s own financial security and retirement goals,” Hammortree said.

Iván Watanabe, managing partner at Opus Private Client in Rye Brook, New York, framed the task as funding two lifetimes at once: the parents’ retirement and a child who may need support indefinitely. Therapy and specialized care costs add up fast, he said. 

“We help families decide which expenses come first, build enough of a cash reserve, review their insurance, and figure out how much they can realistically set aside for their child. Parents shouldn’t have to give up their own financial independence to provide for their child,” Watanabe said.

How ABLE accounts and special needs trusts work together

Hammortree said keeping SSI and Medicaid eligibility is critical because many residential programs, day programs and support services are paid for through Medicaid waiver programs, which let states fund home- and community-based care.

ABLE accounts are tax-advantaged savings vehicles created under Section 529A of the tax code. They allow a person with a disability to build savings without forfeiting benefits. Under Social Security Administration rules, the first $100,000 in an ABLE account is disregarded for SSI purposes. A larger balance can suspend SSI payments, though Medicaid coverage continues. Since Jan. 1, 2026, the accounts have been open to people whose disability began before age 46, up from 26. Even so, ABLE accounts have historically been underused by advisors. 

Hammortree said ABLE accounts work well for a beneficiary’s earnings and modest inheritances, but contribution caps and the SSI balance threshold limit how much they can hold. Special needs trusts fill that gap. These are legal arrangements that hold assets for a person with a disability without counting against means-tested benefits. The two tools, she said, often work best in combination.

“Special Needs Trusts offer greater flexibility for larger assets, help preserve government benefits regardless of trust value, and allow families to direct any remaining assets to other beneficiaries. Advisors play an important role in helping families determine the appropriate funding strategy, often including life insurance, to ensure long-term financial support for their loved one with special needs,” Hammortree said.

Watanabe warned that well-intentioned gifts are a common source of damage. A grandparent who leaves money directly to a grandchild, for example, can put that child’s SSI and Medicaid at risk.

“We work with estate planning attorneys to set up beneficiary designations, special needs trusts, and ABLE accounts so the family can provide extra support without costing the child their benefits. Grandparents, aunts, and uncles need to understand the plan too, because even a small inheritance can cause problems if it goes to the wrong place,” Watanabe said.

What advisors should prioritize before a child turns 18

Hammortree pointed to 18 and 22 as the pivotal milestones. At 18, she said, families should review guardianship, powers of attorney and eligibility for SSI and Medicaid.

“Because many employment supports, day programs, and residential services are accessed through Medicaid waiver programs, obtaining Medicaid eligibility and joining waiver waitlists as early as possible is extremely important. Advisors should also help families understand the impact that assets held directly in the child’s name can have on future benefit eligibility. Proactive planning during these transition years can significantly improve a family’s ability to secure services and financial support for the long term,” Hammortree said.

Alyssa White, executive wealth management advisor at TIAA Wealth Management, said whoever holds decision-making authority should meet with an attorney so the right documents are in place before the family member becomes a legal adult. She also urges clients to name successor caregivers and brief them on their roles in advance.

Why the plan has to keep changing

Caregiving clients most often ask White how much care will cost and for how long. She models near-term expenses with a cushion for longer-than-expected time horizons and adds hypothetical long-term care costs.

“The plan works as a stress test, showing how the family’s finances hold up under a range of scenarios. Just as important, I remind clients that we review the plan at least annually, and sooner if expenses change in a way that materially affects the outcome. The plan is a living tool, not a one-time exercise,” White said.