Planning for Housing: One of the Most Important—and Most Challenging—Parts of Special Needs Planning

By: Connor W. Kavanaugh ChSNC, CTFA

Updated December 4th, 2025

Finding safe, stable, and appropriate housing for an individual with a disability is one of the most complex parts of long-term planning. Families routinely describe housing as their number one concern, and for good reason: supply is limited, support models vary widely, and the decisions you make today can shape your loved one’s future independence, safety, and quality of life.

Whether the long-term vision includes staying in the family home with supports or transitioning into an independent or supported living arrangement, it is essential to evaluate the financial, legal, and practical considerations involved. For many families, the question quickly becomes: should a special needs trust own the home?

Below, we break down the major issues families should consider.

Who Should Own the Home?

It is common for a special needs trust—rather than the individual—to own a home or condo. But understanding how each trust operates is critical.

First-party special needs trusts

• Funded with the beneficiary’s own assets (such as an inheritance or settlement)

• Subject to Medicaid payback upon the beneficiary’s death

• Often have restrictions that make paying certain housing expenses difficult or prohibited

Because of these limitations, first-party trusts are not always ideal for owning real estate.

Third-party special needs trusts

• Funded with assets belonging to someone else (typically parents or family members)

• No Medicaid payback requirement

• Far more flexibility for ongoing expenses related to the home

For many families, a third-party trust is the preferred structure when planning for long-term home ownership.

Capacity and Support: Who Manages the Property?

Owning a home requires maintenance, budgeting, repairs, tax payments, and coordination with contractors. Many adults with disabilities need support to manage these responsibilities.

If the individual has a guardian, conservator, or agent under a power of attorney, that person may have legal authority to assist with property matters. However, direct ownership can still create challenges—such as vulnerability to undue influence, confusion about financial responsibilities, and complications if siblings or caregivers live in the home.

Placing the home in a third-party special needs trust can:

• Protect the property from creditors

• Prevent family conflict over management

• Ensure long-term oversight by a trustee

• Allow professionals to handle financial and maintenance responsibilities

If the home is owned by a first-party trust, similar protections apply during the beneficiary’s lifetime, but Medicaid recovery applies at death—an important consideration.

Planning for Shared Living

If others will live in the home—siblings, caregivers, or roommates—ownership structure becomes even more important. A first-party special needs trust may require those individuals to pay rent so that the trust’s expenditures remain solely for the beneficiary’s benefit. Agencies may evaluate this differently, increasing compliance risk.

A third-party trust offers more flexibility, but still requires careful planning around contributions, rent, and household costs.

Let’s Talk Numbers: The Financial Feasibility

A home purchase is not just the price of the home. A long-term housing plan must also account for:

• Accessibility modifications

• Ongoing maintenance and repairs

• Property taxes and insurance

• Utilities

• Homeowners association dues (if applicable)

• Support staffing or caregiving needs

A common pitfall occurs when a family transfers a home into a trust without setting aside sufficient funds for decades of upkeep. Over time, maintenance costs can consume the trust, leaving less for the beneficiary’s personal support needs.

Creative solutions may help offset these costs, including:

• Identifying roommates

• Purchasing a home with other families

• Sharing common support staff

• Being realistic about the long-term affordability of the property

These arrangements can work beautifully—or fail spectacularly—depending on the trustee, the property, and the individuals involved. Choosing a capable trustee is essential.

Impact on Government Benefits

Housing decisions have significant implications for SSI and Medicaid.

SSI rules for housing payments

When a special needs trust pays for mortgage payments, property taxes, utilities, or other housing expenses, SSI counts this as in-kind support and maintenance (ISM), which reduces the SSI benefit. The reduction is capped at one-third of the federal benefit rate, but it still affects cash flow.

A common strategy to reduce or eliminate ISM is to use an ABLE account. Special needs trusts can contribute to ABLE accounts, and funds withdrawn from ABLE accounts for housing do not trigger ISM penalties under current SSI rules.

Resource considerations

• A primary residence is exempt for SSI and Medicaid purposes.

• If the individual owns the home outright and later moves out, the home becomes a countable resource the following month—jeopardizing benefits.

• If the home is titled to a trust, the sale of the home does not affect eligibility.

These nuances highlight the importance of working with advisors who understand both housing and benefits planning.

Where Do You Go From Here?

Housing will always be one of the most complex elements in planning for individuals with disabilities. Limited availability, regulatory rules, financial considerations, and personal preferences all intersect here. But thoughtful planning—early and collaboratively—can create long-term stability.

Start with the vision.

Build the right team.

Use tools like special needs trusts and ABLE accounts strategically.

And revisit the plan as circumstances change.

A safe, stable, meaningful home is possible—but it requires intention and professional guidance, not guesswork.

If your family is beginning to explore housing options, Palladio Consulting LLC can help you evaluate structures, benefits, costs, and long-term sustainability so you can build a plan that supports your loved one for years to come.