A Simple Will Isn’t Enough When Your Loved One Has Special Needs

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Here's how you can protect your loved one’s future

Families with children or adults who have disabilities face unique worries. One of the most pressing concerns is making sure their loved one is cared for after they’re gone. Writing a simple will may feel like the right step, but in Arizona, such a plan often leaves significant gaps.

If your loved one depends on SSI, AHCCCS Medicaid, or ALTCS, leaving them an inheritance outright could do more harm than good.

Estate planning for special needs is not necessarily about wealth or complexity. It’s about protecting benefits, providing stability, and giving peace of mind. Here's what you should know about estate planning if your loved one has special needs.

Why isn’t a simple will enough in Arizona?

A simple will typically names who receives your property and who handles your estate. Once the probate process is finished, those assets are handed directly to your heirs. This works fine for many families, but it doesn’t address the special rules that apply to people with disabilities.

In Arizona, most individuals with special needs rely on means-tested programs such as SSI, AHCCCS Medicaid, or ALTCS for medical care, housing, and daily support. These programs have strict asset limits. If your loved one inherits even a modest amount through a will, they may suddenly be over those limits. That can cause benefits to stop, leaving them responsible for costs they can't cover.

What happens if you only leave a will?

The biggest risk is that your loved one could lose critical benefits. An inheritance counts as a “resource” for SSI and Medicaid. Until it's spent down, your family member may be ineligible for the coverage that pays for doctors, caregivers, or group homes.

If your loved one is unable to manage their own funds, the probate court in Arizona may intervene. Judges sometimes appoint a conservator to oversee the individual's finances, which entails ongoing reports, restrictions, and legal expenses. Instead of creating security, your gift may add stress and reduce flexibility.

A simple example shows how quickly things can unravel: A parent leaves $150,000 directly to an adult child on ALTCS. Because of the inheritance, ALTCS coverage ends. The child must now pay privately for care at a group home, which includes costs that can exceed $6,000 per month. Within two years, the money is gone, and it takes months to reapply and restart benefits.

How does a special needs trust make a difference?

A special needs trust (SNT) is designed to avoid these problems. Instead of leaving money directly to your loved one, you place it into the trust. A trustee then manages the funds and uses them to improve the quality of life while preserving eligibility for public benefits.

Arizona families usually rely on two kinds of trusts:

Third-party SNT: Funded with a parent’s or relative’s money. After your loved one’s lifetime, the remaining funds can pass to other family members. There is no Medicaid payback.
First-party SNT: Funded with the individual’s own assets, such as a lawsuit settlement. Federal law requires that any remaining funds be repaid to Medicaid for the services provided.

There are also pooled trusts run by nonprofits, which can be a good fit for smaller estates or when you don’t have a private trustee available. The key advantage is flexibility. A trustee can use trust funds for purposes such as therapy, education, travel, hobbies, or personal care.

These are expenses that government programs don’t cover. Because the money belongs to the trust and not the individual, SSI and AHCCCS won’t treat it as a countable asset.

What other options should Arizona families consider?

A strong plan involves more than trust. Other steps can make a big difference, including:

Beneficiary designations: Life insurance, retirement accounts, and transfer-on-death deeds should list the SNT as the beneficiary, not the individual.
Arizona ABLE accounts: These savings accounts enable individuals with disabilities to set aside money for qualified expenses without jeopardizing their benefits. An ABLE account works well in conjunction with an SNT.
Powers of attorney and health care directives: Arizona has specific forms for financial powers of attorney, health care decisions, and mental health treatment. Implementing these measures avoids future court battles.
Guardianship and alternatives: When an adult is unable to make their own decisions, Arizona courts can appoint a guardian. But there are alternatives, such as limited guardianship or supported decision-making, that may preserve more independence.
Letter of intent: This non-legal document captures your loved one’s routines, preferences, therapies, and goals. It provides future caregivers with the insight they need to deliver continuity and compassion.

How can families in Arizona establish a special needs trust?

Planning ahead can feel overwhelming, but breaking it down into steps helps:

Review current benefits: Gather SSI, AHCCCS, and ALTCS paperwork so you know exactly what your loved one receives.
Meet with professionals: Work with an Arizona estate planning attorney who understands special needs law, and consider involving a financial advisor and care manager.
Draft the trust and documents: Create a third-party SNT, update your will, and sign powers of attorney and health care directives.
Align your assets: Update beneficiary designations to ensure money flows into the trust, rather than directly to your loved one.
Fund and test the plan: Some families add a small amount to the trust while they’re alive to ensure the trustee understands how to manage it.
Communicate openly: Share your plan with siblings or relatives so they understand why assets are being handled this way.
Review regularly: Revisit the plan every few years, or sooner if laws or benefits change.

What mistakes should Arizona families avoid?

Even with the best intentions, a few missteps can cause major problems, including:

Naming your loved one directly on life insurance or bank accounts.
Leaving assets to a sibling “for safekeeping” risks divorce, creditors, or personal disputes.
Funding the wrong type of trust, triggering Medicaid payback unnecessarily.
Having a trustee pay directly for food or rent without understanding the impact on SSI benefits.
Skipping professional help and relying on online forms not tailored to Arizona law.

Protect your loved one’s future with the right plan

A well-crafted plan goes beyond a will in Arizona. It protects benefits, preserves independence, and ensures long-term stability. The good news is that you don’t have to figure this out alone. By working with an Arizona estate planning attorney, you can create a special needs trust and supporting documents that safeguard your loved one’s financial and personal future. This isn’t just about legal paperwork; it’s about making sure your child, sibling, or dependent has the quality of life you’ve always wanted for them.

Now is the time to act. Don’t wait until a crisis forces difficult choices. Take the first step toward peace of mind by exploring your options today, and put a plan in place that will protect your loved one for years to come. The Law Firm of Brown & Jensen is here to help you every step of the way. To get started, contact us online or call to book a free consultation.

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