Why Leaving Money to Your Child the Normal Way Can Cost Their Benefits
Most parents plan to leave money to all their children the same way. That usually means a will or a family trust. For a child who receives SSI or Medicaid because of a disability, that plan can do real harm. Georgia and the Social Security Administration check what your child owns, not just what your child earns. That is how they decide if your child still qualifies.
An inheritance, even a modest one, is usually enough to disqualify your child. It can happen the month the money arrives. See what happens to minor children when a Georgia parent dies without a will for the broader version of this problem. Georgia Medicaid and SSI both use the same basic rule. Your child cannot have more than $2,000 in countable resources and still qualify.
This is not a penalty on your child for having money. It is how both programs are built. They cover people who cannot afford care on their own. Once your child’s resources cross that line, the programs assume your child can pay their own way. That is true even if the money you left has to last the rest of their life.
How SSI and Medicaid Count Your Child’s Money in Georgia
The Social Security Administration sets the SSI resource limit at $2,000 for one person. That figure has not changed since 1989. It applies whether your child is 4 or 40.
Georgia links Medicaid eligibility for many disabled children to that same SSI test. A child who qualifies for SSI is usually covered by Georgia Medicaid too. This happens automatically. Some families earn too much for SSI. Their child can often still get Medicaid through Georgia’s TEFRA/Katie Beckett program. This program ignores the parents’ income and resources when a child is disabled and lives at home. It still requires the child’s own resources to stay under that same SSI-style limit.
Some things generally count against your child. These include cash, bank accounts, an inheritance received outright, and a trust your child can legally demand money from. Some things generally do not count. These include the home your child lives in, one vehicle, and up to $100,000 in a Georgia STABLE (ABLE) account.
What Makes a Special Needs Trust Different From a Regular Trust
A regular trust for a child, even one written carefully, usually gives the child some right to the money. Many family trusts pay for the child’s health, education, maintenance, and support. That standard is so broad that Social Security treats it as money the child can already reach. Your child might have a legal right to demand a distribution. Or the trustee might have to pay for anything your child needs. Either way, the government counts the entire trust as your child’s resource.
A special needs trust is written narrower on purpose. Your child has no right to demand money from it. The trustee has full discretion over every dollar. The trustee decides whether and when to spend trust money, not your child. The trustee can only spend it on supplemental needs that SSI and Medicaid do not already pay for. Because of this control, Social Security and Georgia Medicaid do not count the trust as belonging to your child at all. Georgia’s own trust code recognizes this trust type by name. Under O.C.G.A. ยง 53-12-80(f), a special needs trust set up under the federal Medicaid statute is protected in ways an ordinary family trust is not.
Here is the practical result. The same amount of money can go to the same child in the same way. One version disqualifies them from SSI and Medicaid the month it arrives. The other never touches their eligibility at all. The only difference is how the trust is written.
First-Party vs. Third-Party Special Needs Trusts
Not every special needs trust works the same way. The difference matters for what happens to the money after your child dies. A first-party special needs trust is sometimes called a “(d)(4)(A) trust,” after the federal law that created it. It is funded with money that already belongs to your child. Most often, that money is a personal injury settlement. It could also be an inheritance your child received directly, before anyone planned around it. Federal law has one firm rule for a first-party trust. It must include a Medicaid payback provision. When your child dies, the state is paid back for the Medicaid it spent on your child. Family members receive whatever is left after that.
A third-party special needs trust works differently. It is funded with your own money as a parent, not your child’s money. A third-party special needs trust is evaluated under a different framework than a first-party trust. The Medicaid payback rule that applies to first-party trusts has no occasion to apply to a trust that was never funded with your child’s own money. Whatever is left in the trust when your child dies can go to your other children or any beneficiary you name. That is the same as it would work in an ordinary estate plan. For a Georgia parent planning to leave money to a disabled child, a third-party special needs trust is almost always the right tool. Build it as part of your own irrevocable trust planning, not the first-party version.
What a Special Needs Trust Can and Cannot Pay For
A special needs trust is meant to pay for things SSI and Medicaid do not already cover. It is not meant to replace those benefits. Common uses include a wheelchair-accessible vehicle and therapies or equipment Medicaid does not fully pay for. Other common uses are education, transportation, and personal care items.
Two situations call for real caution. Cash paid directly to your child from the trust reduces the SSI payment dollar for dollar. The trust can also pay for your child’s rent, mortgage, or groceries. Social Security calls this “in-kind support and maintenance.” It reduces the SSI check too, capped at $351.33 a month in 2026. A trustee who understands these two limits can still use the trust for almost everything else. That includes therapy, equipment, education, and transportation. None of it touches your child’s SSI.
The Georgia ABLE Account: A Complement, Not a Replacement
Georgia runs its own ABLE savings program called Georgia STABLE. It is open to anyone whose disability began before age 46. Up to $100,000 in a Georgia STABLE account does not count against the SSI resource limit at all. The balance never affects Medicaid eligibility, no matter how large it grows.
Account holders can contribute up to $20,000 a year. If your child works, they can contribute $15,650 more.
A Georgia STABLE account is useful, but it is not a substitute for a special needs trust in an estate plan. It holds far less than most parents plan to leave a child. It is capped at $100,000 for SSI purposes. It does not give a chosen trustee the same long-term control a trust provides. Many families use both. A special needs trust holds the bulk of an inheritance. A Georgia STABLE account covers spending your child manages more directly.
What Happens If You Skip the Trust and Leave Money Directly
You might leave money to your child outright. This could be through a will, as a life insurance beneficiary, or through a joint bank account. The money becomes your child’s resource the moment they receive it. If it pushes your child over $2,000, Georgia and Social Security do not wait for a review before acting.
SSI stops the month the resource limit is exceeded. Medicaid usually stops too. This includes Georgia’s Katie Beckett coverage. Your child, or whoever manages their finances, then has to spend down the inheritance. They can only spend it on allowed expenses, and benefits restart after that. This can take many months. The money you left is gone faster than if it had been protected from the start. A family correcting this after the fact usually has to open a first-party special needs trust with what is left. That version does carry a Medicaid payback requirement at death.
What to Do Next
A special needs trust for a disabled child is a specific kind of irrevocable trust. It is drafted with the SSI and Medicaid rules built in from the start. At The Hive Law, a special needs trust is priced the same flat fee as any other irrevocable trust in Georgia: $6,500, with no hourly billing.
You might already have a will or a family trust that leaves money to a disabled child without this planning built in. If so, it is worth a review before anything changes hands. See how The Hive Law builds an irrevocable trust. It helps to know what a special needs trust costs in Georgia before you decide. Or start with a Book My Free Strategy Call to talk through your family’s situation.
