Special-Needs Trusts and Benefits Planning in Massachusetts
In short: A special-needs trust (SNT) lets you set aside money for your child with autism without disqualifying them from Medicaid, SSI, or other means-tested benefits in Massachusetts. You can use either a first-party trust (funded with the child's assets) or a third-party trust (funded by parents or others). Proper planning ensures your child can access ABA therapy, medical care, and enrichment activities while keeping critical benefits intact. A FREE service like ABA Therapy Now can match you with vetted, BCBA-led providers that accept MassHealth and private insurance.
Key takeaways
- Special-needs trusts protect a child's eligibility for MassHealth (Medicaid) and SSI while allowing funds for extras like therapies and recreation.
- Massachusetts recognizes both first-party (payback) trusts and third-party trusts; a third-party trust is usually best for parent-funded planning.
- If you leave assets directly to a child with special needs, they may lose benefits-an SNT is the safer legal alternative.
- Benefits planning includes reviewing MassHealth income/asset limits (e.g., $2,000 for an individual in 2025) and SSI rules.
What Is a Special-Needs Trust, and Why Does It Matter in Massachusetts?
A special-needs trust (SNT) is a legal tool that lets you set aside money or property for a person with a disability-like your child with autism-without affecting their eligibility for public benefits. In Massachusetts, families turn to SNTs for one main reason: to keep their child's Medicaid (MassHealth) and Supplemental Security Income (SSI) intact while still having funds for things those programs don't cover (e.g., ABA therapy co-pays, recreational activities, travel, or a computer).
Without an SNT, an inheritance, lawsuit settlement, or even a savings account in the child's name could push them over the very low asset limits-$2,000 for an individual in 2025. That can trigger a loss of benefits, including MassHealth coverage for ABA therapy. An SNT acts as a legal container: the money belongs to the trust, not the child, so it doesn't count as the child's asset.
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Key Benefits Programs in Massachusetts
MassHealth
MassHealth is Massachusetts' Medicaid program. It covers a wide range of medical services, including applied behavior analysis (ABA) therapy for children diagnosed with autism. Many families use MassHealth Standard or CommonHealth (for people with disabilities). Asset limits for MassHealth Standard are low (e.g., $2,000 per individual), but CommonHealth has higher limits. A special-needs trust can help preserve eligibility for either.
Supplemental Security Income (SSI)
SSI is a federal cash benefit for low-income individuals with disabilities. In 2025, the individual asset limit is $2,000. SSI also provides automatic MassHealth eligibility in most cases. If your child receives SSI, leaving them money directly can stop that benefit. An SNT protects it.
Section 8 Housing and SNAP
Other means-tested programs like Section 8 vouchers and SNAP (food stamps) also have asset limits. An SNT ensures your child can still qualify for these resources if needed.
Types of Special-Needs Trusts in Massachusetts
First-Party (Self-Settled) SNT
Funded with the child's own assets-for example, an inheritance, lawsuit award, or back-child-support payment. The trust must be created by a parent, grandparent, or guardianship court, and the child must be under 65. At the child's death, any remaining assets must first repay MassHealth for services received (called "payback").
Third-Party SNT
Funded with assets from someone else-usually parents, grandparents, or other family. No payback is required; leftover assets go to whomever the trust document says. This is the most common type for parents planning for their child's future.
Pooled Trust
Managed by a nonprofit organization (like The Arc of Massachusetts). Families contribute funds to a large trust, and each beneficiary has a separate account. The nonprofit handles the investments and distributions. Pooled trusts are often more affordable than setting up an individual trust. They work for both first-party and third-party money.
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How to Set Up a Special-Needs Trust in Massachusetts
Step 1: Decide Which Type Is Right
Work with a Massachusetts special-needs planning attorney (look for someone with experience in disability trusts, MassHealth law, and estate planning). They'll help you choose between a standalone trust, a testamentary trust (in a will), or a pooled trust.
Step 2: Choose a Trustee
The trustee manages the trust and makes distributions. You can be the trustee while you're able, or you can name a family member, friend, or professional trustee (e.g., a bank or trust company). For a pooled trust, the nonprofit is the trustee.
Step 3: Write the Trust Document
The document must state that the trust is for the "sole benefit" of the child, include spendthrift language, and comply with Massachusetts law. It must also name a remainder beneficiary (who gets leftover funds after the child's death).
Step 4: Fund the Trust
Transfer assets (cash, stocks, life insurance proceeds, real estate) into the trust. The trust should have its own bank account and tax ID number (EIN). Never put the child's name on the account.
Costs vary: attorney fees for a simple trust can range from $1,500 to $3,500; a pooled trust might charge a small setup fee ($200-$500) and low annual fees.
Practical Tips for Families Raising a Child with Autism
- Start early. You can create a third-party trust at any time, even if you have no assets now. Naming the trust as a beneficiary of your life insurance or retirement accounts is a simple first step.
- Don't name your child directly as a beneficiary on any account. If you pass away without a trust, that money could go straight to your child and break their benefits.
- Consider a letter of intent. This is a non-legal document that explains your child's routine, preferences, therapy schedule, and medical history. It helps your trustee and future caregivers.
- Review your plan every year. MassHealth rules change, family situations change, and your child's needs evolve.
Common Mistakes to Avoid
- Leaving money outright in a will. This bypasses the trust and counts as the child's asset.
- Using a joint bank account with your child. That makes the money the child's asset.
- Forgetting to fund the trust. A trust document is useless without assets-make sure life insurance policies and retirement accounts list the trust as beneficiary.
- Choosing the wrong trustee. A trustee who doesn't understand disability benefits may accidentally give the child cash that triggers a benefits loss. Professional trustees are often worth the fee.
How ABA Therapy Now Can Help
Once your benefits and trust planning are in place, the next step is finding quality ABA therapy for your child. ABA Therapy Now is a FREE service that matches families with vetted, BCBA-led providers across Massachusetts. We can connect you with clinics that accept MassHealth, private insurance, or both. No strings attached-just a warm, personal match. Fill out a short form on our website, and we'll call you with options.
Where to Get Help in Massachusetts
- Massachusetts Disabled Persons Protection Commission (DPPC) - For reporting or getting help with disability-related concerns.
- The Arc of Massachusetts - Offers pooled trusts and benefits counseling.
- MassHealth Customer Service - 1-800-841-2900 (for benefit questions).
- Community Legal Aid - Free legal help for low-income families (covers some benefits planning).
Final Thoughts
Special-needs trusts and benefits planning can feel overwhelming, but you don't have to do it alone. Start with a conversation with a qualified attorney or a nonprofit like The Arc. Protect your child's future, preserve their access to MassHealth and ABA therapy, and rest easier knowing your planning is in place. And when you're ready for therapy, let us help with the provider search-ABA Therapy Now is here for you.