06/10/2026
If you've set up a special needs trust for a loved one, first of all, that's a big deal. A lot of families never get there.
But here's something I talk about a lot with the families I work with: setting up the trust is only half the job.
The IRS treats trusts very differently than individuals. A trust can hit the top 37% federal tax rate with as little as $16,000 of income in a year. And because of the rules around special needs trusts, trustees often can't simply pay that income out to the beneficiary without risking their Medicaid or SSI benefits so it sits inside the trust and gets taxed hard.
In my latest blog, I break down exactly where these tax issues come from and why so many families don't realize it's happening until it's already cost them.
Part 2 with the solutions is coming next week. But if you want to talk through your family's specific situation before then, my door is open.
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