Providing financial support to a disabled child is one of the most meaningful ways families can help ensure long-term stability and quality of life. Whether it’s a birthday gift, financial assistance with living expenses, or a contribution toward future needs, many parents and grandparents assume they can simply transfer money directly to their loved one. Unfortunately, in Massachusetts, as in the rest of the country, these well-intentioned gifts can sometimes create unexpected consequences.
Many individuals with disabilities rely on important government benefits such as Supplemental Security Income (SSI) and MassHealth. These programs often have strict financial eligibility requirements, including limits on the amount of income and assets a person can possess. For SSI recipients, countable resources are generally limited to $2,000 for an individual. Receiving money directly from a family member could potentially push the recipient over that threshold and impact their eligibility for benefits.
This can come as a surprise to families who are simply trying to help. A cash gift, a deposit into a personal bank account, or even an inheritance may have consequences that were never intended. In some situations, the recipient could experience a reduction in benefits or be required to spend down excess assets before regaining eligibility. Because government benefits are often a critical source of healthcare coverage and financial support, protecting those benefits should be an important part of any financial planning strategy.
Fortunately, there are planning tools available that can allow families to provide financial assistance while preserving eligibility for public benefits. One popular option is an ABLE account, known in Massachusetts as the Attainable Savings Plan. These accounts allow eligible individuals with disabilities to save and receive contributions from family and friends without negatively affecting MassHealth eligibility, and up to certain limits they can also preserve SSI eligibility. Contributions, investment growth, and qualified withdrawals receive favorable treatment under federal and state rules.
Another valuable option is a Special Needs Trust. Rather than giving funds directly to the disabled individual, family members can place assets into a properly structured trust for that person’s benefit. The trust can then be used to help pay for a wide variety of supplemental expenses while helping preserve access to government benefits. Special Needs Trusts are often used for larger gifts, inheritances, life insurance proceeds, or long-term family wealth planning.
The key takeaway is that every family’s situation is different. What may seem like a simple gift of a few thousand dollars could have significant implications if the recipient depends on SSI, MassHealth, or other means-tested programs. Before making substantial financial transfers, families should consider consulting with an attorney or financial advisor who specializes in special needs planning and Massachusetts benefit programs.
A little planning today can prevent costly mistakes tomorrow. By understanding the rules and using tools such as ABLE accounts and Special Needs Trusts, Massachusetts families can provide meaningful financial support while protecting the benefits that many disabled individuals rely upon for their health, independence, and overall well-being.
Founded by a nurse attorney and with offices in Acton, Andover, and Sudbury, Massachusetts, Generations Law Group helps families navigate the complex areas of estate planning and elder law to inform and protect loved ones of every generation.
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