Special Needs Trust vs. ABLE Account: Which One Does Your Family Need?

Parents of children with disabilities often receive conflicting advice about Special Needs Trusts (SNTs) and ABLE Accounts. Both tools protect eligibility for needs-based benefits such as SSI, Medi-Cal, and IHSS, but they serve different purposes. Many families benefit from using both.

What Is a Special Needs Trust?

A Special Needs Trust allows a person with disabilities to receive financial support without disqualifying them from needs-based benefits.

Third-Party Special Needs Trust

Funded with someone else’s money (parent, grandparent, etc.)
Does not require court approval
Does not require Medi-Cal payback
Commonly used in family estate plans

First-Party (Self-Settled) Special Needs Trust

Funded with the beneficiary’s own money (settlement, inheritance, back-pay)
Requires court approval under California Probate Code
Must include Medi-Cal reimbursement provisions
Trustee must notify DHCS at establishment and termination

What an SNT Can Pay For

Under SSI rules, SNTs may pay for:

Transportation
Education
Caregiving
Medical or therapy services
Recreation
Personal items

SNTs must be structured carefully to avoid affecting eligibility for benefits.

What Is an ABLE Account?

An ABLE Account (CalABLE in California) is a tax-advantaged savings account.

Eligibility

Disability began before age 26
Federal law increases this age to 46 on January 1, 2026
Must meet SSI/SSDI disability criteria or have a qualified diagnosis

Key Features

Annual contribution limit: $18,000 (2025)
Funds grow tax-free
Does not affect Medi-Cal eligibility
SSI unaffected up to $100,000

Qualified Disability Expenses Include

Housing
Utilities
Food and basic living expenses
Transportation
Assistive technology
Employment-related support

Which One Should You Use?

Use a Special Needs Trust for long-term planning, inheritances, and structured lifetime financial protection.

Use an ABLE Account for day-to-day spending, housing costs, and financial independence.

Most families benefit from having both tools working together.