What Are Special Needs Trusts?

A Special Needs Trust is a financial vehicle setup to assist individuals with special needs in supplementing their quality of life above and beyond the benefits received from government programs.  A well drafted Special Needs Trust is designed to manage assets and allow a beneficiary to qualify and maintain essential government benefits while receiving financial assistance from the special needs trust.

There are three types of Special Needs Trusts:

First Party/Self Settled SNT:

Special Needs Trust authorized under 42 U.S.C  1396p (d)(4)(a) that is established by an individual under the age of 65 and disabled with funds that belong to them for the purpose of qualifying and maintaining SSI and Medicaid. The funds in the trust will be excluded as an asset provided that the State will receive all amounts remaining in the trust upon the death of the individual up to an amount equal to the total medical assistance paid on behalf of the individual under a state Medicaid plan.

Third Party SNT: 

Special Needs Trust established by most often a parent, grand parent, or other family member to assist an individual with special needs. This trust has the same function as the First Party trust in that the assets are not countable as a resource for SSI or Medicaid

Pooled Trust: 

Special Needs Trust authorized under 42 U. S. C 1396p (d)(4)(c) that is established and maintained by a non-profit organization  for individuals under the age of 65 (depending on the state) with funds that belong to them for the purpose of qualifying and maintaining SSI and Medicaid. The funds in the trust will be excluded as an asset provided that the State will receive all amounts remaining in the trust upon the death of the individual up to an amount equal to the total medical assistance paid on behalf of the individual under a state Medicaid plan. The pooled trust cost conscious alternative to a first party trust.