Special Needs Estate Planning in Rhode Island

The $2,000 Problem

Every financial decision in special needs planning revolves around one number: $2,000. That's the SSI countable resource limit for an individual. Exceed it, and SSI benefits can stop. In Rhode Island, losing SSI means losing the automatic Medicaid pathway, so the young adult may need to qualify through another Medicaid/LTSS pathway to preserve coverage for BHDDH-funded developmental disability services, personal care, and the community-based supports your young adult depends on.

Standard estate planning ignores this constraint entirely. A well-meaning grandparent leaves $50,000 in a will directly to a disabled grandchild, and the inheritance can push them over the applicable resource limits for SSI and Medicaid LTSS. Rebuilding eligibility after an asset spike can take months.

Special needs estate planning exists to prevent exactly this scenario. The tools are straightforward — the coordination between them is where families get tripped up.

Special Needs Trusts

A Special Needs Trust (SNT) holds assets for the benefit of a person with a disability without counting those assets as a resource for SSI or Medicaid purposes. The trust pays for things that government benefits don't cover: vacations, electronics, furniture, vehicle modifications, educational enrichment, entertainment, and supplemental care.

Third-party SNTs are funded by family members — parents, grandparents, or other relatives. The trust is established during the family member's lifetime or through their will. The critical advantage: when the beneficiary dies, the remaining trust balance passes to whoever the trust designates (other family members, a charity). There is no Medicaid payback requirement.

First-party SNTs are funded with the disabled individual's own assets — an inheritance received directly, a personal injury settlement, or accumulated savings. These trusts carry a Medicaid payback provision: when the beneficiary dies, any remaining balance must first reimburse the state for Medicaid benefits paid during the beneficiary's lifetime.

In Rhode Island, standard estate packages from special needs planning law firms (Fabisch Law, McCarthy Law, Orson & Brusini) typically cost $2,000 to $5,000+ for trust drafting. The investment makes sense when significant assets are involved — a poorly drafted trust can be deemed a "countable resource" by SSA, defeating its entire purpose.

Pooled Trusts

Rhode Island families who don't have enough assets to justify the cost of an individual SNT can use a pooled trust. Organizations like CPNRI (Community Provider Network of RI) and PLAN of MA & RI manage master trust programs where individual beneficiaries maintain separate sub-accounts within a larger pooled fund.

Startup enrollment fees range from $200 to $1,000, with a typical 1% annual management fee. Pooled trusts are limited to asset management and trust disbursement — they don't help with educational or medical decision-making authority. But they maintain SSI eligibility without the Medicaid payback requirement that applies to first-party individual trusts (though Medicaid may be entitled to remaining funds in the sub-account upon the beneficiary's death, depending on the trust's terms).

ABLE Accounts

Rhode Island's ABLE program (RI's ABLE) provides a simpler, lower-cost savings vehicle. The 2026 rules:

• Annual contribution limit: $20,000 from all sources combined
• ABLE-to-Work bonus: Employed account owners without employer retirement plans can contribute an additional amount up to their gross wages or the federal poverty level ($15,650 in 2026), for a maximum of $35,650
• SSI resource exclusion: The first $100,000 in an ABLE account is completely disregarded for SSI purposes. Above $100,000, SSI cash benefits suspend, but Medicaid eligibility continues regardless of balance
• Maximum account balance: $395,000
• Age-of-onset eligibility: Expanded to age 46 as of January 1, 2026 (up from 26)
• Fees: $56/year (paper delivery) or $31/year (electronic delivery), with a $5 discount for Rhode Island residents

ABLE accounts offer a debit card through Fifth Third Bank, making them practical for day-to-day disability-related expenses. They're not a replacement for an SNT when significant assets are involved, but they're the right tool for families managing modest savings and regular expenses.

How These Tools Work Together

The most common coordination pattern for Rhode Island families:

1. Third-party SNT funded through the parents' estate plan — holds the bulk of family assets intended for the disabled adult child's long-term support. No Medicaid payback. Can supplement what government benefits don't cover.

2. ABLE account for accessible, day-to-day spending — funded by family gifts, the young adult's earnings, or distributions from the SNT. The debit card makes it practical for routine purchases. Keeps spending money out of the ward's bank account and below the SSI resource limit.

3. Pooled trust as a fallback — useful when a first-party obligation exists (a direct inheritance or settlement that must go through the individual) and the amounts don't justify a standalone first-party SNT.

4. Guardianship of the estate if the young adult cannot manage financial decisions — the guardian administers the assets, but the assets themselves should be structured through the tools above rather than sitting in a guardianship account where they count against the $2,000 limit.

Where Guardianship Fits

A guardian of the estate has legal authority to manage the ward's finances, but guardianship alone doesn't protect assets from the SSI resource limit. Money sitting in a bank account titled to the ward counts as a resource regardless of whether a guardian controls it.

This is why estate planning and guardianship planning need to happen in parallel, not sequentially. The guardianship gives the legal authority to act. The trust and ABLE structures give the financial architecture that preserves eligibility.

If the young adult can manage some financial decisions with support, a Supported Decision-Making agreement or a durable power of attorney may be sufficient — avoiding the guardianship entirely while still allowing a trusted person to manage the financial planning tools.

The Rhode Island Adult Guardianship & Alternatives Guide includes a financial coordination worksheet that maps asset protection strategies to guardianship status, SSI limits, and BHDDH funding tiers.

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