Types of Special Needs Trusts

First-Party SNT

Funded with the disabled person’s own assets, such as settlement proceeds, an inheritance already received, or assets legally belonging to the beneficiary. A disabled person under 65 years of age, their parent, grandparent, legal guardian, or the court can establish these types of trusts. In general, any assets remaining after the disabled person passes away are subject to Medicaid payback rules — a “payback” to the state up to the amount it paid for Medical Assistance on behalf of the disabled person.

Third-Party SNT

Funded with assets belonging to someone other than the beneficiary, usually a parent, grandparent, or other family member. Because the beneficiary never owned those assets, a properly drafted third-party SNT is generally not subject to Medicaid payback.