Special Needs Planning in Chattanooga

Why a Will Alone Won’t Protect a Disabled Beneficiary

A will distributes assets after death, but it can’t protect a disabled heir from what happens next. When a person with a disability receives an outright inheritance, that inheritance becomes a countable resource under SSI and TennCare eligibility rules. Depending on the amount, it can end their benefits until the funds are spent down.

A supplemental needs trust (also called a special needs trust, or SNT) addresses this problem. Assets held in a properly drafted SNT are generally not counted toward the resource limits that determine SSI or TennCare eligibility. The trustee can then use those funds for expenses that improve quality of life: assistive technology, transportation, education, recreation, and personal care items, without displacing the government benefits that cover core medical and support needs.

Two recent rule changes are worth knowing. Under updated SSA rules effective September 30, 2024, trust distributions used to pay for food no longer reduce an SSI recipient’s monthly benefit. Distributions that pay for housing costs such as rent, mortgage, or utilities may still affect SSI payments, which makes trustee guidance on those expenditures important. These rules can change, so ongoing plan review matters.

Types of Special Needs Trusts Under Tennessee Law

Not every SNT works the same way. The right structure depends on where the funds come from and who controls them.

Third-Party Special Needs Trust
Funded by parents, grandparents, or other family members through lifetime gifts or an estate plan, this is the most common tool in proactive planning. Because the beneficiary never owned the assets, no TennCare payback is required at the beneficiary’s death, and remaining funds can pass to other family members.

First-Party Special Needs Trust
Funded with assets belonging to the person with a disability, typically from a personal injury settlement, an outright inheritance already received, or a conservatorship proceeding. Tennessee generally requires TennCare payback from remaining funds after the beneficiary’s death. When a conservator is involved or the funds originate from litigation, court approval may also be required.

Pooled Special Needs Trust
Managed by a nonprofit that maintains individual sub-accounts while pooling assets for investment and administration. This option is worth considering when no suitable individual trustee is available.

Tennessee-Specific Tools: ABLE TN & Guardianship

Tennessee’s ABLE savings program, ABLE TN, is administered by the Tennessee Department of Treasury. It allows individuals whose qualifying disability began before age 46 to save funds in a tax-advantaged account without those savings counting against SSI resource limits, up to certain thresholds. Under Public Chapter 44, enacted in 2023, TennCare can’t recover funds from an ABLE TN account after the beneficiary’s death, making it a particularly strong planning tool in Tennessee. An SNT and an ABLE TN account can work together: the SNT holds larger long-term assets while the ABLE account provides more direct access for routine qualified disability expenses. Like all rules governing benefits, these provisions are subject to future change.

When a person with a disability reaches adulthood and can’t manage their own legal or financial affairs, guardianship or conservatorship through the Tennessee courts may be necessary. That process often coincides with creating an SNT. Where the person has legal capacity, powers of attorney and health care directives can add another layer to the plan.

Why Chattanooga Families Choose Horton, Ballard & Pemerton PLLC for Special Needs Planning

Families navigating disability planning rarely face a single legal question. A pending divorce, a guardianship proceeding, a custody arrangement, or an unexpected inheritance can all intersect with the need for an SNT. We handle estate planning, trusts, and family law under one roof, so you don’t have to coordinate between separate practices when multiple issues arise at once.

Our attorneys are licensed in Tennessee, Georgia, and Alabama, giving families throughout the Chattanooga area a single team for every dimension of their plan. We offer personal, prompt communication with direct attorney access throughout your matter, and fee structures are tailored to each client’s situation. Because your loved one’s circumstances, TennCare rules, and federal SSI regulations can all shift over time, we can also help clients revisit and update their plans as needs evolve.

Start Your Family’s Special Needs Plan Today

A conversation now can help prevent a crisis later. We offer free initial consultations to families in Chattanooga and across the Tennessee, Georgia, and Alabama region. Call Horton, Ballard & Pemerton PLLC at (423) 427-4944 or reach us through our online contact form to schedule your free consultation.