Special Needs Trusts · Arizona
Special needs trusts in Arizona, explained.
A gift left the wrong way can end your child’s ALTCS and SSI on the day it arrives. A special needs trust holds it instead, and pays for what those programs never cover.
Why an outright gift can do real damage.
SSI and ALTCS both have a hard asset ceiling. An adult on SSI can hold about $2,000 in countable assets. One inheritance can break that in a single day.
The rules do not care that the money came from love. They count what sits in your child's name. The benefits stop, and winning them back can take months.
A special needs trust owns the money instead. Your child never holds it, so there is nothing to count. The trustee spends it on the extras the programs skip.
See when a guardianship is neededSSI
A monthly federal check for people with a disability and very little income. An adult loses it once countable assets pass about $2,000.
ALTCS
The Arizona Long Term Care System. It is the state's Medicaid program for long-term care, and it pays for the aide, the day program, and nursing care.
Two trusts. The money decides which.
Families ask which one is better. That is not the question. Whose money fills the trust decides the answer for you, and the two sets of rules are not close.
- Whose money fills it
First-party trust
Your child's own. Usually an injury settlement, a back-pay award, or an inheritance that already landed in their name.
Third-party trust
Someone else's. A parent, a grandparent, or anyone who wants to leave them something.
- Who can set it up
First-party trust
The person, a parent, a grandparent, a legal guardian, or the court. Federal law lists who is allowed to do it.
Third-party trust
Whoever is giving the money. You can write one into your own living trust now and fund it later.
- Age limit
First-party trust
It has to be in place before your child turns 65.
Third-party trust
None. You can set one up at any age, for a child or an adult.
- Payback to the state
First-party trust
Yes. When your child passes, Arizona is repaid for what ALTCS spent on their care, out of what is left.
Third-party trust
No. Nothing goes back to the state.
- Where leftover money goes
First-party trust
The state is paid first. Your other children see only what remains after that.
Third-party trust
Wherever you say. A sibling, a niece, a church, a school, a charity.
- When it is the right one
First-party trust
Money is already in your child's name and has to move before the next benefits review.
Third-party trust
You are planning ahead, and none of the money has touched their name yet.
What the money buys
The things benefits never pay for.
One rule sits over all of it: the trustee pays the store, the clinic, or the school. Money handed to your child is counted as income the month it arrives.
Care the plan will not cover
Extra therapy hours, a private aide, dental work, or a specialist outside the network.
A home that fits
A ramp, a wider door, a safer bathroom. The trust can even own the house and let your child live in it.
Getting around
A used van and the insurance on it. Gas, repairs, a bus pass, or a ride service.
School and work
Tuition, tools, job coaching, a laptop, a short certificate program.
A phone and a connection
A phone plan, internet at home, and a computer. None of that is in the benefit check.
Time with people they love
A plane ticket to see a sibling. A hotel room for a family wedding. A week at camp.
The ABLE account’s job is smaller.
An ABLE account is savings your child controls and spends from directly. It is quick to open and it costs little, which is why families reach for it first.
The limits are real. Deposits each year are capped at the federal gift tax limit, and SSI stops ignoring the account once it passes $100,000. A trust has no such ceiling.
The two work well side by side. The trust holds the bulk, and it can move small sums into the ABLE account for the things your child likes to buy alone.
See how we build trusts and willsAn ABLE account
Savings for a person whose disability began before age 46. Your child spends from it directly, and SSI ignores the first $100,000 in it.
Life insurance as the fuel
Many parents name a third-party trust on the policy instead of the child. The policy pays the trust. The trust guards the benefits.
How we build one with you.
- 01
We map the benefits first
ALTCS, SSI, health coverage, housing help. What your child has now, and what they may need at 40, shapes how the trust is written.
- 02
We pick the right kind
If the money is already in your child's name, it is a first-party trust and the timing matters. If it is your money, we write a third-party trust.
- 03
You choose a trustee and a backup
A sibling knows your child. A bank knows the rules. Plenty of families name both, so one person cares and one keeps the books clean.
- 04
You write a letter of intent
It is not a legal paper. It is a plain letter about routines, foods, fears, doctors, and what a good day looks like. The trustee reads it for years.
- 05
We fund it and tell the family
A policy, a share of your own trust, or a deposit. Then grandparents update their wills, so no gift lands in your child's name by mistake.
Keep exploring
Where this fits in your plan.
Special needs trust questions, answered.
These are the ones parents ask first. If yours is not here, call and ask it.
Call (480) 863-6303Not if it is written and run right. The trustee pays the store or the clinic, never your child. Cash handed over counts as income.
No. The point of the trust is that your child does not control the money. Control is what makes the money count as theirs.
Call before it is spent. A first-party trust can still hold it, but it has to be set up before your child turns 65, and Arizona is repaid later.
Sometimes. A trust handles money, and a guardianship handles medical and daily choices for an adult who cannot make them. They answer different questions.
There is no set number. We start from what your child needs each month that benefits do not pay for, then look at how long the money has to last.
Yes, and that is why we set one up early. Grandparents, aunts, and friends can all give to the trust instead of giving to your child.
For small savings, often yes. It stops being enough once the balance nears $100,000 or the yearly deposit cap blocks what you want to put in.
Yes. The trust can own the home and your child can live there. Held that way it is not their asset. Living there rent free can trim the SSI check a little, so we plan for that.
A third-party trust pays whoever you named. A first-party trust repays Arizona for ALTCS costs first, and pays out whatever is left after that.
This page is general information, not legal advice about your family. Reading it does not make us your lawyers. Benefit rules change, so talk with us before you sign or fund anything.
Turquoise Law Group, PLLC contracts with Roddy & Urness, PLLC or Nancy C. Pohl, PLLC in order to provide legal advice to your matter at an affordable cost.
Schedule your meeting
Protect the benefits and the gift.
Book a free consultation. We will look at the benefits your child has, the money you want to leave, and the trust that keeps both of them safe.
- Phone, video, or in our Scottsdale office
- Free and with no obligation
- Available in English and Spanish
Prefer to talk now?
(480) 863-6303