As a parent of a child with a disability, you're already balancing more than most families. Between medical appointments, therapies, school accommodations, and everyday life, financial planning can feel like just one more overwhelming task on the list. But thoughtful planning now can make an enormous difference in your child's financial security—both today and long after they've grown up.
In this article, we'll cover:
- Why financial planning looks different for families with disabled children
- How to use ABLE accounts to save without jeopardizing benefits
- Setting up a Special Needs Trust for long-term security
- Understanding SSI eligibility and how it changes at age 18
- Planning for your child's future as a representative payee
- Government programs and resources every parent should know about
Why Financial Planning Is Different for Your Family
When your child has a disability, the standard financial advice—save as much as you can, build a college fund, help them get started in adulthood—comes with significant caveats. Many children with disabilities will eventually rely on means-tested benefits like SSI and Medicaid, and those programs have strict rules about how much money and assets a person can have. A well-meaning inheritance, a generous gift, or even a savings account in your child's name could disqualify them from the very benefits they need most.
This doesn't mean you can't save for your child's future—it means you need to use the right tools. The good news is that several financial vehicles exist specifically to help families in your situation save and plan without putting benefits at risk.
ABLE Accounts: Your Most Accessible Savings Tool
ABLE (Achieving a Better Life Experience) accounts are one of the most powerful tools available to families. An ABLE account works similarly to a 529 education savings plan, but the funds can be used for a much broader range of disability-related expenses—including housing, transportation, healthcare, education, assistive technology, and basic living expenses.
In 2026, you can contribute up to $20,000 per year to an ABLE account. If the account holder is working, they may be able to contribute an additional amount (up to approximately $15,650 in 2026) through the ABLE to Work provision. The first $100,000 in an ABLE account is excluded from SSI's resource limit, which means your child can have significant savings without losing SSI eligibility. Medicaid eligibility is not affected regardless of the ABLE account balance.
Your child is eligible for an ABLE account if their disability began before age 26 (or before age 46 under the expanded eligibility from recent legislation). You can open an account in any state's ABLE program, not just the state where you live, so it's worth comparing options to find the best investment choices and lowest fees.
Family members, friends, and even your child themselves can contribute to the account. This makes ABLE accounts an excellent way to accept gifts for your child without the money counting against benefit limits.
Special Needs Trusts for Long-Term Security
For larger amounts of money—such as an inheritance, life insurance proceeds, or legal settlements—a Special Needs Trust (SNT) is the gold standard for protecting your child's benefit eligibility. A properly established SNT holds assets for the benefit of your child without those assets counting as resources for SSI or Medicaid purposes.
There are two main types: a first-party SNT (funded with your child's own money, such as a legal settlement) and a third-party SNT (funded with someone else's money, such as an inheritance). The key difference is that a first-party SNT must include a Medicaid payback provision—meaning when your child passes away, any remaining funds must first be used to reimburse Medicaid for services provided. A third-party SNT has no such requirement, so remaining funds can pass to other family members.
Setting up an SNT requires working with an attorney who specializes in special needs or disability law. While there's an upfront cost, the protection it provides for your child's long-term financial security is well worth the investment. If a trust seems too complex or expensive, a pooled trust managed by a nonprofit organization can be a simpler alternative.
Understanding SSI at Age 18
One of the biggest financial transitions for families comes when your child turns 18. Before age 18, SSI eligibility considers the parents' income and resources (called parental deeming). This means that many children with disabilities aren't eligible for SSI while living at home because their parents' income is too high.
At age 18, everything changes. Social Security stops counting parental income and resources and evaluates your child as an individual. If your adult child has limited income and resources (below $2,000 in countable resources) and meets the disability criteria under adult standards, they may qualify for SSI—up to $994 per month in 2026—along with automatic Medicaid eligibility in most states.
This transition requires a new application, and it's important to understand that the disability evaluation at 18 uses adult standards, which are different from the criteria for children. Some children who received SSI as minors may not qualify as adults, so it's worth consulting with a benefits counselor or attorney as your child approaches this milestone.
Your Role as a Representative Payee
If your child receives SSI or SSDI (such as Disabled Adult Child benefits on your work record), you'll likely serve as their representative payee—the person responsible for managing their benefits. As a rep payee, you're required to use the funds for your child's current needs, including food, shelter, clothing, medical care, and personal comfort items. You'll also need to keep records and file annual accounting reports with Social Security.
Being a representative payee is a serious fiduciary responsibility, and keeping your child's benefit funds separate from your own accounts is essential. Using a dedicated bank account for your child's benefits makes it much easier to track spending, maintain clear records, and stay compliant with Social Security's reporting requirements.
Programs and Resources Every Parent Should Know
Beyond SSI and ABLE accounts, several other programs can support your family's financial planning. Medicaid waiver programs (often called Home and Community-Based Services waivers) can provide funding for in-home care, community participation, respite care for parents, and other services that support your child's independence. Waitlists can be long, so applying early—even years before you think you'll need services—is a smart strategy.
Vocational Rehabilitation services can help your child prepare for employment as they approach adulthood, providing job training, education assistance, and placement services at no cost. The Ticket to Work program offers similar support for adults receiving disability benefits.
Review your own estate plan with a disability-savvy attorney. Your will, life insurance beneficiary designations, and retirement account beneficiaries should all be structured to avoid leaving money directly to your child in a way that could disqualify them from benefits. Instead, direct those assets to a Special Needs Trust.
Finally, connect with other parents in your situation through disability advocacy organizations and parent support groups. The knowledge and experience of families who have been through these planning challenges can be invaluable.
Managing a child's disability benefits is one of the most important things you'll do as a parent. Purple offers checking accounts designed for representative payees, making it easier to keep funds separate, track spending, and stay compliant with Social Security's requirements.