There is a trap in ordinary estate planning that catches families with a disabled child or sibling, and it catches them in the most painful way possible: by working exactly as written.
You leave your daughter an equal share. She receives it. And because she received it, she loses the benefits she has been relying on.
Why an inheritance can do damage
Supplemental Security Income and Medicaid are means-tested. Eligibility depends on the beneficiary’s own countable assets staying under a very low ceiling, and an inheritance arriving in their name counts.
The result is a sequence nobody intended. The benefits stop. The inheritance gets spent down, often on the care the benefits were covering and frequently at private rates that consume it far faster than anyone expects. Then, with the money gone, the family has to reapply and rebuild eligibility from the beginning.
What was meant as provision for the rest of her life instead bought a gap in coverage.
And it is not only cash. Medicaid in particular can be the mechanism behind services that have nothing to do with a doctor’s office: a group home placement, a day program, supported employment, a waiver slot that took years to obtain. Those are the things at risk, and some of them are not simply re-obtainable once lost.
Disinheriting is the wrong fix
The instinct many parents land on is to leave the disabled child nothing and ask a sibling to look after them informally.
It is understandable and it is a bad idea. Money left to a sibling is legally the sibling’s. It is exposed to their divorce, their creditors, their own death and their own estate plan. If the relationship changes, or the sibling simply predeceases, there is no enforceable obligation to anyone. And the sibling has been handed a lifelong administrative duty with no framework and no authority.
You have not protected the benefits. You have removed the safeguards.
What a special needs trust does
A special needs trust, sometimes called a supplemental needs trust, holds the inheritance for the beneficiary’s benefit without the beneficiary owning it. Because the assets are not theirs, they generally do not count against eligibility.
The trustee can then pay for the things benefits do not cover, which is a longer list than people assume: therapies and equipment not otherwise funded, education, travel, a computer, furniture, recreation, a vehicle, dental and vision work. The trust supplements the safety net rather than replacing it, which is where the word supplemental comes from.
Two kinds come up, and the difference matters:
A third-party trust is funded with someone else’s money, usually a parent’s, through their estate plan. This is the ordinary case and it is the flexible one. On the beneficiary’s death, whatever remains can pass to whomever you named.
A first-party trust is funded with the beneficiary’s own money, typically a personal injury settlement or an inheritance that already arrived in their name. These carry a Medicaid payback requirement on death and have stricter rules. Sometimes they are the only option left, which is precisely why planning ahead is better than fixing it afterward.
A pooled trust run by a nonprofit can make sense for smaller amounts where a private trustee is not practical.
MiABLE accounts, alongside a trust rather than instead of one
Michigan participates in the federal ABLE program through MiABLE, which lets a person who became disabled before age 26 hold savings in their own name, up to a limit, without it counting against SSI and Medicaid.
It is genuinely useful and it is not a substitute for a trust. Contributions are capped annually, there is a lifetime ceiling, and funds may be subject to Medicaid payback on death. The two work well together: the ABLE account for money the beneficiary can reach and manage directly, the trust for the larger inheritance.
The choice of trustee is the real decision
Drafting the trust is the straightforward part. Choosing who administers it for potentially forty years is the hard one.
The trustee has to understand how distributions interact with benefits, because a well-meant payment made the wrong way can reduce an SSI check. Handing cash directly to the beneficiary is generally the wrong move. Paying a provider is usually the right one. The person raising your other children is not automatically the right person for this, and it is common and sensible to separate the two roles.
Co-trustees, a professional trustee alongside a family member, or a corporate trustee for larger sums are all reasonable structures depending on the amount involved and who is available.
A letter of intent
This is not a legal document and it may be the most valuable thing in the file.
A letter of intent is what you write for whoever takes over: how your child communicates, what frightens them, the routine that works, which doctors, which medications, what they love, what they cannot tolerate, who their friends are, what you would want for them at forty.
Nobody else can write it, and it is the part families are always glad they did.
This is the same argument as the rest of the site, in its sharpest form
Elsewhere here we make the case that a will only names recipients while a trust sets terms, and that an inheritance arriving the wrong way can do a beneficiary more harm than good.
Special needs planning is that argument at its least abstract. The harm is not hypothetical or a matter of degree. It is the loss of specific, hard-won benefits, at a moment when the person who arranged everything is no longer there to fix it.
Remy Law PLLC is based in Ann Arbor and works with families across Washtenaw County and western Wayne County. George Remy has practiced law in Michigan for more than eighteen years and handles every plan personally. If you have a child or sibling receiving disability benefits, the first conversation is a free fifteen minute call.