Trust Planning After a Diagnosis or Disability Event

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A cancer diagnosis. A sudden stroke. A car accident that changes everything. These moments arrive without warning, and they leave families scrambling to figure out what comes next. If you or a loved one has recently received a diagnosis or experienced a disability event, one of the most important things you can do right now is take a hard look at your estate plan, specifically your trust planning. At Slowik Estate Planning in Atlanta, Georgia, we help families build trust plans that protect what matters most, even when life takes an unexpected turn.

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Why a Diagnosis or Disability Event Changes Everything in Your Estate Plan

Most people create an estate plan when things are going well. They pick a few beneficiaries, sign some documents, and put them in a drawer. But a medical diagnosis or disability event changes the entire picture. Suddenly, questions about who manages your money, who makes your medical decisions, and how your assets will be protected become urgent, not theoretical.

In Georgia, trust planning after a diagnosis is not just about protecting assets. It is about making sure the right people have the right authority at the right time. Without a properly structured trust, your family could face court proceedings, delayed access to funds, and real risk of losing government benefits that your loved one depends on.

Think about this: if a family member receives an inheritance or a lawsuit settlement while receiving Supplemental Security Income (SSI) or Medicaid, that money could disqualify them from benefits entirely. Gifts, bequests, inheritances, and death benefits to a disabled person may terminate their public benefits like SSI and Medicaid, because these programs are means-tested and impose strict asset and income limitations on the recipient. That is why acting quickly after a diagnosis matters so much.

Georgia law under O.C.G.A. Title 53 governs wills, trusts, and the administration of estates. Working with an estate planning attorney in Atlanta who understands both state and federal law gives you the best chance of building a plan that holds up when it counts most. The team at Slowik Estate Planning is ready to help you think through your options and put a solid plan in place.

Special Needs Trusts: Protecting Benefits While Providing Support

One of the most powerful tools available after a disability event is a Special Needs Trust (SNT), sometimes called a Supplemental Needs Trust. A Special Needs Trust can help provide the necessary financial support needed without jeopardizing the individual’s government benefits, and the SNT assets are used to make the disabled individual’s life as good as it can possibly be under the circumstances.

There are three main types of SNTs you should know about. A first-party SNT is funded with the disabled person’s own assets, such as a personal injury settlement or an inheritance they already received. A first-party special needs trust is most often used when the special needs beneficiary receives an inheritance, a lawsuit award or settlement, or a gift, or when the beneficiary owned assets before becoming disabled that would make him or her ineligible for government benefits. A third-party SNT is funded by family members or other loved ones who want to provide support. A third-party SNT, one that is funded with assets not belonging to the beneficiary, is not subject to the payback requirement, and all property remaining in a third-party SNT at the death of the beneficiary may be distributed to others as the trust agreement directs.

There is also a pooled trust option. A pooled trust is established and managed by a non-profit organization, where the disabled individual funds an account that is part of a master fund with other accounts by individuals with disabilities, and the disabled individual benefits from his or her assets only while the nonprofit organization oversees the entire fund.

The Social Security Administration considers those who are blind or those who are unable to do any substantial gainful activity due to severe physical or mental impairments that will result in death or will continue for not less than one year to be disabled. If your family member meets this definition, a properly drafted SNT could be the most important financial tool in their life. Contact Slowik Estate Planning today to find out which type of trust fits your situation.

ABLE Accounts and How SECURE 2.0 Expands Your Options in 2026

Beyond traditional Special Needs Trusts, families dealing with a disability event now have more tools available than ever before, thanks to recent federal law changes. One of the most significant is the expanded access to ABLE accounts under the SECURE 2.0 Act.

ABLE stands for Achieving a Better Life Experience. The ABLE account is a relatively new planning tool that offers an individual with disabilities a tax-free savings option, similar to a 529 College Savings Plan, that does not interfere with the individual’s eligibility for means-tested government benefits such as SSI and Medicaid. These accounts are simple to open and give beneficiaries or their caregivers direct access to funds for everyday disability-related expenses.

Here is the big news for 2026: SECURE 2.0 increases the ABLE account eligibility onset age from 26 to 46, a change effective for taxable years beginning after December 31, 2025, which allows individuals who become disabled later in life to open ABLE accounts and retain benefits. This is a major change. Before this update, someone who developed a disability after age 26, such as a veteran with a service-connected condition or someone diagnosed with multiple sclerosis in their 30s, could not access an ABLE account at all.

For 2026, the base annual contribution limit for an ABLE account is $20,000 from all sources combined, meaning any deposits made by you, your family, friends, a special needs trust, or a 529 plan rollover all count toward the same cap. ABLE accounts work especially well alongside an SNT. Because special needs trusts can hold larger amounts and ABLE accounts offer easier day-to-day access, some families fund a trust for the bulk of their savings and move smaller amounts into the ABLE account for regular expenses the beneficiary controls directly.

An Atlanta estate planning lawyer at Slowik Estate Planning can help you figure out whether an ABLE account, an SNT, or a combination of both makes the most sense for your family’s specific needs.

Trust Planning, Retirement Accounts, and the Step-Up in Basis Issue

When a disability event happens, families often overlook how retirement accounts and trust structures interact. Getting this wrong can cost your family a significant amount in taxes. Two key areas to understand are the treatment of inherited retirement accounts under SECURE 2.0 and the step-up in basis rules under federal tax law.

Under the SECURE and SECURE 2.0 Acts, disabled beneficiaries receive special treatment when it comes to inherited retirement accounts. Disabled beneficiaries can stretch distributions over their life expectancy, meaning they receive smaller annual withdrawals, potentially remain in lower tax brackets, and preserve benefits. This is a major advantage compared to most other beneficiaries, who must empty an inherited IRA within 10 years. Trustees can also name a special needs trust as the retirement account beneficiary, allowing the trustee to use required minimum distributions to support the beneficiary.

The step-up in basis issue is equally important. Under Rev. Rul. 2023-2, the IRS clarified that assets held in an irrevocable grantor trust do not receive a step-up in basis at the grantor’s death if those assets are not included in the grantor’s taxable estate. This matters because, without a step-up in basis, your beneficiaries may owe capital gains tax on appreciation that built up over many years. Proper trust design, with guidance from Slowik Estate Planning, can help you weigh the trade-offs between estate tax savings and income tax consequences.

For families with larger estates, coordinating Estate Tax Planning in Atlanta Georgia alongside disability trust planning is critical. You want a plan that protects your assets from both unnecessary taxes and the risk of losing government benefits. Slowik Estate Planning can help you look at the full picture and build a strategy that works on both fronts.

Asset Protection and Incapacity Planning After a Disability Event

A disability event does not just raise questions about government benefits and taxes. It also raises serious questions about asset protection and who will manage your finances if you can no longer do so yourself. Without the right documents in place, your family may have to go to court to get authority to act on your behalf, a process that is slow, expensive, and public.

A well-structured revocable living trust can solve much of this problem. When you transfer assets into a trust during your lifetime, you name a successor trustee who steps in automatically if you become incapacitated. There is no court involvement, no delay, and no public record. This is one of the most practical reasons to act on your trust planning right away after a diagnosis.

Asset protection is another layer of planning that becomes more important after a disability event. If you are facing long-term care costs or potential creditor claims, certain trust structures can help shield your assets. Working with an Asset Protection Lawyer at Slowik Estate Planning means you get a plan designed to protect what you have worked hard to build.

Do not forget about your other loved ones in this process. If you have pets, for example, Georgia law allows you to create a pet trust to provide for their care. Pet guardianships and pet trusts are a thoughtful way to make sure every member of your household is cared for, no matter what happens to you.

Georgia’s O.C.G.A. Title 53 also includes provisions for simultaneous death and year’s support for surviving spouses and minor children, which can intersect with disability planning in important ways. A complete estate plan accounts for all of these scenarios. The team at Slowik Estate Planning, located in Atlanta, Georgia, is here to help you build that plan. Reach out today to schedule a consultation and take the first step toward protecting your family’s future.

FAQs About Trust Planning After a Diagnosis or Disability Event

Can I set up a Special Needs Trust for myself after I receive a disability diagnosis?

Yes, in many cases you can. A first-party special needs trust can be established by the disabled person who receives public benefits, as long as he or she is a mentally competent adult. If you have received a diagnosis and anticipate needing government benefits like SSI or Medicaid, acting quickly is important. A first-party SNT must generally be established before you reach age 65 to avoid Medicaid transfer penalties. Slowik Estate Planning in Atlanta can review your situation and help you move forward with a plan that protects your eligibility for benefits.

Will assets in a Special Needs Trust count against my Medicaid or SSI eligibility?

The funds placed in a special needs trust, when properly used, generally do not count as assets or income for the purposes of determining public assistance eligibility. However, the trust must be carefully drafted to meet federal and Georgia state requirements. Using the wrong language or commingling funds from different trust types can create serious problems. That is why working with an experienced estate planning attorney at Slowik Estate Planning is so important. A poorly drafted trust can unintentionally disqualify a beneficiary from the very benefits it was meant to protect.

What is the new ABLE account age limit in 2026 and who does it affect?

Beginning January 1, 2026, a significant expansion to ABLE account eligibility takes effect, and the ABLE Age Adjustment Act modifies the original ABLE Act by changing one of its most restrictive eligibility criteria: the age of disability onset. Beginning in 2026, SECURE 2.0 increases this age to 46, which is particularly helpful for those with mental illnesses, disabling diseases, and veterans who may have become disabled after the age of 26. If you or a family member developed a disability between the ages of 26 and 46 and were previously shut out of ABLE accounts, you may now qualify. Contact Slowik Estate Planning to find out how this change fits into your overall disability trust plan.

What happens to an irrevocable trust’s assets when the grantor dies? Do they get a step-up in basis?

This is a critical tax question. Under Rev. Rul. 2023-2, the IRS clarified that assets held in an irrevocable grantor trust do not receive a step-up in basis at the grantor’s death if those assets are not included in the grantor’s gross estate for federal estate tax purposes under Internal Revenue Code Chapter 11. This means beneficiaries who later sell those assets may owe capital gains tax on years of appreciation. This rule has significant implications for how irrevocable trusts are structured in disability planning. Slowik Estate Planning can help you weigh the income tax and estate tax trade-offs before you make any irrevocable decisions.

Do I need to update my existing trust after a family member receives a disability diagnosis?

Almost certainly, yes. If the trust was drafted before the SECURE Act, it may need updated language to allow the trustee to accept retirement benefits and stretch distributions over the beneficiary’s life expectancy. Beyond that, beneficiary designations, trustee selections, and distribution standards may all need to be revisited in light of the diagnosis. An outdated trust can actually cause harm by directing assets in ways that disqualify your loved one from critical benefits. The team at Slowik Estate Planning in Atlanta, Georgia, offers trust reviews and updates to make sure your plan reflects current law and your family’s current circumstances.

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