Special Needs Planning
Special Needs Planning in Denver: A Guide for Colorado Families
Special needs planning is the process of creating a financial and legal framework that protects the long-term security of an individual with a disability while preserving their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI). For Colorado families, it typically involves special needs trusts, ABLE accounts, guardianship arrangements, and benefit coordination strategies tailored to state programs.
Schedule a ConsultationUnderstanding the Need
What Is Special Needs Planning?
Special needs planning addresses a critical challenge: how to provide financial support for a loved one with a disability without inadvertently disqualifying them from means-tested government programs. Without proper planning, a direct inheritance or legal settlement can trigger benefit loss that may take months or years to restore.
A coordinated plan helps families navigate the intersection of financial resources, legal protections, and public benefits. Outcomes depend on individual circumstances and state-specific rules, so ongoing review and professional coordination are important.
Why Colorado Families Plan Ahead
- 1 Direct gifts or inheritances may disqualify a beneficiary from SSI and Medicaid
- 2 Restoring lost benefits can take months and require legal proceedings
- 3 Colorado's HCBS waiver programs have specific eligibility and enrollment processes
- 4 Planning spans multiple generations and requires periodic review
Trust Structures
Special Needs Trusts: Types and How They Work
A special needs trust (SNT) is a legal arrangement that holds and manages assets for the benefit of a person with a disability without those assets counting as the beneficiary's own resources for Medicaid and SSI eligibility purposes. Three primary types serve different situations, each with distinct funding sources, age limits, and payback requirements.
| Feature | First-Party SNT | Third-Party SNT | Pooled SNT |
|---|---|---|---|
| Funding source | Beneficiary's own assets | Someone else's assets | Either; pooled by nonprofit |
| Age limit | Under 65 | None | Varies by sub-account type |
| Medicaid payback | Required | Not required | Required for first-party funds |
| Typical use | Settlements, direct inheritances | Estate planning by family | Modest assets, professional management |
First-party SNTs are governed by federal law under 42 U.S.C. Section 1396p(d)(4)(A), which requires a Medicaid payback clause. Establishing any SNT involves legal costs and ongoing administrative responsibilities. Trustees must follow specific distribution rules, and improper distributions may jeopardize benefits. Families should coordinate with a qualified attorney and a financial advisor to structure the trust appropriately.
Tax-Advantaged Savings
ABLE Accounts for Coloradans with Disabilities
An ABLE (Achieving a Better Life Experience) account is a tax-advantaged savings account for individuals with disabilities that allows funds to grow without affecting eligibility for means-tested benefits, subject to certain limits. Colorado offers its own ABLE program for eligible residents.
$20K
Annual contribution limit (2026)
$15.6K
ABLE to Work add-on (2026)
$100K
Disregarded for SSI eligibility
$2K
SSI resource limit, individual (2026)
For 2026, the annual contribution limit is $20,000 per beneficiary from all sources combined. Employed beneficiaries who do not contribute to an employer-sponsored retirement plan may contribute additional funds up to the lesser of their earned income or the federal poverty level for a one-person household ($15,650 in the continental U.S. for 2026), potentially bringing total contributions to $35,650. Up to $100,000 in an ABLE account is disregarded as a resource for SSI eligibility, while the SSI resource limit remains $2,000 for an eligible individual and $3,000 for an eligible couple. (Sources: IRS and SSA 2026 guidelines; as of July 2026.)
ABLE accounts offer flexibility but have contribution caps and eligibility requirements. Funds must be used for qualified disability expenses, and non-qualified withdrawals may be subject to taxes and penalties. Families should review current Colorado ABLE program details before enrolling.
Legal Protections
Guardianship and Conservatorship in Colorado
When an individual with a disability turns 18, parents no longer have automatic legal authority to make decisions on their behalf. Colorado families may need to consider guardianship for personal and healthcare decisions, conservatorship for financial decisions, or less restrictive alternatives.
Full guardianship removes significant decision-making rights, so families should explore less restrictive options first with guidance from a qualified attorney. The choice depends on the individual's abilities and needs and should be reviewed periodically as circumstances evolve.
Alternatives to Full Guardianship
-
A
Supported Decision-Making
Agreements that allow the individual to retain decision-making authority with guidance from trusted supporters
-
B
Powers of Attorney
May address financial or healthcare decisions if the individual has capacity to execute them
-
C
Healthcare Directives
Allow the individual to express healthcare preferences in advance, depending on capacity
Colorado Programs
Preserving Government Benefits: Colorado HCBS Waivers
Colorado's Medicaid program, known as Health First Colorado, operates multiple Home and Community-Based Services (HCBS) waivers for individuals with disabilities. As of 2026, Colorado offers nine 1915(c) waivers plus Community First Choice (CFC), a state plan amendment that began moving personal-care services from waivers into a state-plan entitlement starting July 1, 2025.
Adult Disability Waivers
Includes Developmental Disabilities (DD), Elderly Blind and Disabled (EBD), Supported Living Services (SLS), Brain Injury (BI), and Complementary and Integrative Health (CIH) waivers for adults with disabilities.
Children's Waivers
Colorado operates waivers for children and youth, including Children with Complex Health Needs (CwCHN) and Children's Extensive Support (CES), designed for children with developmental disabilities or medically fragile conditions.
Enrollment Process
Eligibility requires enrollment in Health First Colorado and a functional assessment through a local Case Management Agency. Waitlists may apply for certain waivers.
Proper special needs planning aims to preserve access to these programs. However, eligibility rules are complex and subject to change. Families should verify current waiver availability and requirements with Colorado's Department of Health Care Policy and Financing or a qualified professional. (Source: Colorado Department of Health Care Policy and Financing; as of July 2026.)
Our Approach
The Stellarix Group Approach
At The Stellarix Group, special needs planning is integrated into a holistic, multi-generational financial plan rather than treated as an isolated document. Our team coordinates special needs trusts, ABLE accounts, insurance planning, estate strategies, and legacy planning within a single plan that accounts for the entire family's financial picture.
This coordinated approach may help avoid gaps that can arise when planning is fragmented across multiple advisors and attorneys, though every family's situation is unique and outcomes vary. We serve families in Denver, across Colorado, and nationwide, and we work alongside your attorney and CPA to help ensure legal and tax considerations are addressed by the appropriate professionals.
Financial planning, advisory, and insurance services are offered through MML Investors Services, LLC (MassMutual).
Melissa Lang
Financial Advisor
The Chartered Special Needs Consultant (ChSNC) designation represents specialized training in the financial, legal, and emotional complexities of planning for individuals with special needs and their families. Melissa is one of the few advisors in the Denver market holding this credential.
Schedule a ConsultationActionable Steps
Special Needs Planning Checklist
Use this checklist as a starting point. Every family's situation is unique, and these items should be reviewed with qualified legal and financial professionals.
Common Questions
Frequently Asked Questions
What is the downside of a special needs trust?
Special needs trusts involve upfront legal costs, ongoing administrative duties, and distribution restrictions. A first-party SNT requires Medicaid payback upon the beneficiary's death, meaning remaining assets may go to the state rather than heirs. Trustees must follow strict rules, and improper distributions can jeopardize government benefits.
What can't a special needs trust pay for?
An SNT generally cannot pay for food or shelter directly, as SSI classifies these as in-kind support and may reduce the beneficiary's monthly benefit. Cash given directly to the beneficiary can also disqualify them from benefits. The trust should pay for supplemental expenses such as medical care not covered by insurance, education, transportation, and recreation.
What are common SNT mistakes to avoid?
Common mistakes include naming the beneficiary as trustee, distributing cash directly to the beneficiary, failing to include a Medicaid payback clause in a first-party SNT, and not coordinating the trust with overall estate and insurance planning. Working with an attorney experienced in special needs planning and a financial advisor can help avoid these errors.
How much does it cost to set up a trust in Colorado?
Costs vary widely depending on the type of trust, the attorney's fees, and the complexity of the family's situation. Pooled trusts may have lower initial costs because they use a standardized joinder agreement. Families should request fee quotes from attorneys who specialize in special needs planning in Colorado.
Where can I set up a special needs trust?
A special needs trust should be established with the guidance of a qualified attorney licensed in your state. In Colorado, several elder law and special needs planning attorneys handle SNTs. A financial advisor with special needs expertise, such as one holding the ChSNC designation, can help coordinate the trust within your broader financial plan and refer you to appropriate legal counsel.
What is the ABLE account contribution limit for 2026?
For 2026, the annual ABLE account contribution limit is $20,000 per beneficiary from all sources combined. Employed beneficiaries who do not contribute to an employer-sponsored retirement plan may contribute additional funds up to the lesser of their earned income or $15,650 (the 2026 continental U.S. federal poverty level for a one-person household), potentially bringing total contributions to $35,650. (Sources: IRS and SSA 2026 guidelines; as of July 2026.)
Ready to Begin?
Plan with Confidence for Your Loved One's Future
Special needs planning requires coordination across legal, financial, and benefit systems. Our team, including a ChSNC-credentialed advisor, is here to guide your family through every step. Serving Denver, Colorado, and families nationwide.
The Stellarix Group | 2000 S Colorado Blvd, Tower 2, Ste 800, Denver, CO 80222