Special Needs Trust Attorney | Louisiana | Gretna
A properly drafted special needs trust lets a disabled beneficiary hold family assets or receive an inheritance without losing Medicaid or SSI eligibility. I draft SNTs personally for Louisiana families across the West Bank and throughout the New Orleans area — built to meet both federal benefit program requirements and Louisiana trust law.
A modern, family-focused estate planning practice
At the Law Office of Johann Chau, we help families plan for the future with care and clarity. Since 2011, we’ve guided clients across Chicago and the suburbs through wills, trusts, probate, and more. Johann leads every case with experience and compassion as your attorney, while Mina, our paralegal, provides hands-on support to make every step simple and stress-free. Together, we’ve built a warm, approachable law practice designed to help you protect what matters most.
About the Law Office of Johann Chau
Will My Disabled Child Lose Medicaid If They Inherit Money?
Without a special needs trust: almost certainly, yes.
Medicaid and SSI are needs-based programs with strict asset eligibility limits. A direct inheritance — a lump-sum bequest from a grandparent's estate, a personal injury settlement, a life insurance payout made payable to the beneficiary directly — counts as a resource under both programs' rules. Once countable assets exceed the applicable threshold, benefits stop. The beneficiary must spend down the inherited funds before they can requalify.
This is among the most consequential gaps in a standard estate plan. A parent or grandparent leaves money intending to provide for a disabled child, and the result is the opposite: the inheritance eliminates the benefits that have been supporting them.
A Louisiana special needs trust — sometimes called a supplemental needs trust — holds assets in a way that federal program rules do not count toward Medicaid or SSI eligibility. The beneficiary keeps their benefits. The trust assets fund what government programs don't cover. Done correctly, it isn't a choice between the inheritance and the benefits. A properly structured SNT preserves both.
Third-Party vs. First-Party SNTs: Which Type Does Your Family Need?
Louisiana special needs trusts fall into two categories. The distinction matters because they are structured differently, funded differently, and carry different obligations after the beneficiary's death.
For general context on how trusts function under Louisiana law, my Louisiana trusts overview covers the broader framework before diving into SNT-specific structure.
Third-Party Special Needs Trust
A third-party SNT is funded with assets belonging to someone other than the disabled beneficiary — most often a parent, grandparent, or other family member who wants to leave an inheritance without disrupting the beneficiary's government benefits. This is the right structure for most Louisiana families building an estate plan that includes a disabled child or grandchild.
The critical advantage: there is no Medicaid payback requirement. When the beneficiary dies, remaining trust assets pass to other heirs named in the trust document. The state has no claim on those funds.
I draft these as standalone trusts or as integrated components of a broader estate plan, coordinated with your will, beneficiary designations, and any tutorship documents in place for minor children with disabilities.
First-Party Special Needs Trust
A first-party SNT is funded with assets that already belong to the disabled beneficiary — typically after a direct inheritance, a personal injury settlement, or a gift made payable to the beneficiary rather than held in trust.
These trusts can preserve benefits, but they carry an obligation that third-party trusts do not: upon the beneficiary's death, Medicaid must be reimbursed for benefits paid during the beneficiary's lifetime before any remaining assets pass to other heirs.
A first-party SNT is the right tool when assets have already reached the beneficiary's hands and benefits are at immediate risk. The window to act is narrow. I advise families in this situation to reach out before any of the inherited funds are spent or transferred in ways that could affect the trust's validity.
What a Special Needs Trust Can Pay For
The purpose of an SNT is to supplement government benefits, not replace them. Because Medicaid and SSI already cover certain baseline needs, trust distributions are designed to fund the quality-of-life expenses those programs don't.
What a well-drafted Louisiana SNT typically can fund:
- Therapies and medical care not covered by Medicaid — specialized treatments, vision care, dental, behavioral therapy
- Adaptive technology and equipment — communication devices, specialized computers, mobility aids
- Transportation — a vehicle, maintenance, modifications, rideshare services
- Education and vocational training
- Recreation and social participation — camps, gym memberships, travel, entertainment
- Personal care services beyond what Medicaid provides
- Hobbies, music, arts, and other quality-of-life expenses
What distributions must handle carefully:
- Direct cash payments to the beneficiary
- Food and shelter costs paid directly by the trust, which can reduce SSI benefits dollar for dollar
This is where poorly drafted trusts create problems in practice. A trustee who pays a beneficiary's grocery bill directly, or issues cash for personal expenses, may inadvertently reduce SSI or trigger a resource-counting issue.
How the trustee makes distributions matters as much as how the trust is written. I build explicit distribution guidance into every SNT I draft — the document itself tells the trustee what is appropriate and how to structure payments correctly.
Your Plan Should Outlast You. Make Sure It Works After You're Gone.
Most parents of disabled children carry a version of the same concern: I won't be around forever. What happens to my child when I can't manage things for them?
A third-party special needs trust answers that question in writing before it becomes urgent. The trust operates after your death under the direction of a trustee you name — a sibling, a trusted family friend, or a professional trustee — guided by instructions you put in place now. Those instructions reflect what you know about your child's needs, preferences, and situation in ways a court or a stranger cannot.
A well-structured SNT is not a standalone document. It works best as part of an integrated estate plan: coordinated with your will, your beneficiary designations, and the rest of your legal framework. I build special needs trusts as components of that full picture — not as afterthoughts added after the plan is already done.
What Louisiana Families Ask About Special Needs Trusts
Will my disabled child lose Medicaid if they inherit money in Louisiana?
A direct inheritance — money or property left to the beneficiary without a trust — counts as a resource under Medicaid and SSI eligibility rules. Once countable assets exceed the applicable limit, benefits stop and the beneficiary must spend down before requalifying. A properly drafted special needs trust holds those assets in a way that does not count toward eligibility, allowing the beneficiary to keep their benefits alongside the inheritance.
How do I set up a special needs trust in Louisiana?
A Louisiana SNT must satisfy both Louisiana trust law requirements and federal Medicaid and SSI program rules — which means the drafting matters as much as the intent. The process starts with a conversation about your family's situation: whether a third-party or first-party structure applies, who will serve as trustee, and how the trust fits into your broader estate plan. I draft every SNT personally. The first step is a 15-minute discovery call.
What is a third-party special needs trust in Louisiana?
A third-party SNT is funded with assets belonging to someone other than the disabled beneficiary — typically a parent or grandparent building an estate plan that includes an inheritance for a disabled child. It does not count toward the beneficiary's Medicaid or SSI eligibility, and it carries no Medicaid payback requirement at the beneficiary's death. This is the most common structure for families doing advance estate planning.
What is a first-party special needs trust and when is it needed?
A first-party SNT is funded with assets that already belong to the disabled beneficiary — most often after a direct inheritance or personal injury settlement. It can preserve Medicaid and SSI eligibility even after assets arrive, but it requires Medicaid reimbursement from remaining funds at the beneficiary's death. If your child has already received assets that put their benefits at risk, contact me before those funds are spent or transferred.
Can a special needs trust be set up after an inheritance is already received?
Yes, through a first-party special needs trust — but timing is critical. The trust must be established before the inherited assets are spent or transferred in ways that could affect its validity under program rules. If your child received a direct inheritance and benefits are at risk, the window to act may be short. This is a situation where early legal guidance is worth the call.
Does a special needs trust affect SSI eligibility in Louisiana?
A properly structured SNT does not count as a resource for SSI eligibility purposes. However, how the trustee handles distributions is just as important as how the trust is drafted. Distributions for food and shelter paid directly by the trust can reduce SSI benefits. Cash distributions create resource-counting issues. I build distribution guidance into every trust I draft to help trustees avoid these problems in practice.
Protect the Benefits. Keep the Inheritance.
A special needs trust starts with a conversation about your family's situation and what you need the trust to accomplish. From there, I draft the documents, walk you through what the trustee needs to know, and make sure the structure holds up under both Louisiana law and federal program rules.
