How special needs trusts can help Arizonans secure loved a one's future

Myra Shepeard-Myers, ATFA

Submitted photo/Dan Delaney

Court-supervised trusts face strict, often county-specific rules, and even minor changes in care needs can cause issues if not handled precisely.”

More than 1 in 4 Americans meets some definition of disability, according to the U.S. Centers for Disease Control and Prevention — yet many families are unaware of the tools available to legally and financially protect their loved ones without jeopardizing critical means-tested benefits like Medicaid and Supplemental Security Income.

One such tool is a special needs trust, which is designed to support individuals with disabilities by preserving benefit eligibility and providing supplemental resources that improve their quality of life, such as transportation, caregiving or therapeutic services that public benefits may not cover.

When to consider a special needs trust

The term “special needs trust,” also known as “supplemental needs trust,” describes a category of trust intended to benefit people with disabilities or complex care needs who may rely in part on public benefits.

While there’s no one-size-fits-all answer to estate planning, certain life events may signal the need to incorporate a special needs trust:

• A new diagnosis (e.g., autism, chronic illness, congenital condition)
• Accidents resulting in long-term care needs
• A child approaching age 18 and transitioning to adult benefit systems
• Marriage or other milestones affecting eligibility
• Aging parents who are no longer able to manage care (subject to certain age limitations)
• Large financial settlements, gifts or inheritances
• Moving to a new state with different benefit systems
• Changes in health, behavior or care requirements
• Routine trust reviews or life updates
• Estate planning or naming a successor trustee

Common pitfalls of planning alone

Families managing special needs planning alone often make choices that feel right in the moment, such as giving a loved one with a disability spending money or titling a car to the trust. But that can inadvertently disqualify them from benefits, expose the trust to liability or trigger a Medicaid payback that drains the trust entirely.

In Arizona, the margin for error is even narrower. Court-supervised trusts face strict, often county-specific rules, and even minor changes in care needs can cause issues if not handled precisely.

Another common pitfall is naming a trustee who isn’t equipped for the responsibility. Relatives or close friends are often chosen based on loyalty or familiarity, but the role calls for technical knowledge, connections to critical resources, financial oversight and long-term planning. Special needs trust professionals can serve as trustees who:

• Work closely with families, guardians and conservators via regular check-ins to manage disbursements, cover essential expenses and uncover evolving needs
• Administer caregiver payroll, including employment law, tax compliance and required reporting
• Maintain meticulous records for court-supervised trusts, navigating Arizona’s complex, locally mandated requirements
• Step into “future appointment” roles, offering stability when a parent or original caregiver is no longer able to serve

Without a specialized trustee who knows how to maintain third-party status, navigate evolving benefit rules and structure assets properly, families may not realize what’s at risk until it’s too late.

Planning for the future, even when you’re not there

Every parent, sibling or guardian of a loved one with a disability faces one of life’s hardest questions: “Who will care for them when I no longer can?”

That question gets heavier with time. According to The Arc’s FINDS Community Report 2023, more than 50% of caregivers reported very high or extreme stress levels.

Special needs trusts can provide families a way to prepare — offering vital support across a wide range of financial situations, including when assets may limit public assistance but still fall short of covering a lifetime of care out of pocket.

Putting a plan in place can help ensure your loved one stays supported, their quality of life preserved and their care uninterrupted.

Editor’s note: Myra Shepeard-Myers, ATFA, is director of special needs trust administration at BMO Wealth Management, which has locations throughout the Valley. Please send your comments to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.