Advisors may be on their own, but that's part of the market's potential.

There isn't a lot of information out there to help financial professionals deal with the special needs of clients with disabled family members. Financial planner Ron Pearson discovered that from personal experience.

Roughly 15 years ago, Pearson asked himself what would become of his two developmentally disabled sons when he and his wife weren't around anymore. At the time, he was winding down his navy career and studying for the CFP designation. He thought it'd be easy to find the information he wanted to help him meet the financial and lifestyle needs of his sons, but his coursework didn't have the answers.

Pearson eventually found the necessary material elsewhere, and then went to a lawyer who specialized in trusts and wills and asked him to draw up a special needs trust for his sons. The lawyer didn't know what that was. "I realized that if it was this hard for me to figure it out with my background, it must be more so for others," says Pearson, owner of Beach Financial Advisory Service, a fee-only firm in Virginia Beach, Va.

Today, one-third of Pearson's practice focuses on planning for families with disabled and seriously ill members, and he speaks nationally on the topic with other advisors and various groups. "I find that special needs is one of those areas that financial planners might run into once in their career," says Pearson. "It's one of those niche issues that's hard to plug into."

Special needs cases can be tricky both financially and emotionally, and plugging into the wrong outlet could spell trouble for the client. "When you have a special needs child, financial planning becomes a two-headed goal," says Neil McKeon, a vice president and financial advisor with Merrill Lynch in Princeton, N.J. "You must fully fund the retirement of the parents, while also funding the lifestyle of their child in a way that keeps them eligible for government benefits."

Other than the super wealthy, most families with special needs children rely on government-funded programs such as Medicaid and Supplemental Security Income (SSI) for assistance. Medicaid covers medical costs; SSI provides for food, clothing and shelter.

To qualify for these and other programs such as Section 8 housing, a special needs person can't have more than $2,000 in total assets, among other stringent requirements. Because these programs don't meet all of the financial needs of disabled people, many families create special needs trusts to handle noncovered expenses such as transportation, recreation, entertainment or whatever else is needed to maintain a desired lifestyle.

These trusts are established in one of two ways. One method involves a third-party funded vehicle set up by the parents or other family members of a special needs person. These can involve a family inheritance, an insurance policy or both. The other involves money received from a personal injury settlement. In either case, the funds must be put into a trust and administered by a trustee.

When properly constructed and administered, special needs trusts provide supplemental funds without forfeiting essential government benefits. But if the trustee unwittingly pays for services covered by the government, this reduces those benefits by an equal amount. Say, for instance, a special needs person gets $560 a month in SSI, and the trustee uses $600 to buy that person a new wardrobe. That would eliminate the SSI benefits, and without SSI the person isn't eligible for Medicaid. Once these are lost, families must go through the bureaucratic hassle of reapplying for benefits.

Another problem occurs when a special needs person receives money directly for any reason, including an inheritance, and even if it's used to purchase items not covered by government programs. It's considered income, and it could push the recipient over the eligibility threshold for needs-based government programs.