Supplemental needs trusts (SNT), also referred to as special needs trusts, allow a beneficiary who is receiving needs-based support in the form of Supplemental Security Income (SSI) and/or Medi-Cal to keep their benefits, while allowing the trust assets to be invested for the beneficiary’s needs.

There are two main types of special needs trust, third-party, meaning the funds are from someone other than the disabled individual and first-party, meaning the funds belong to the disabled individual.

A third-party special needs trust can be set by anyone, but is generally done by a family member. This type of trust is generally given great latitude and allows the assets to pass to whomever the grantor wants upon the disabled individuals death.

A first-party trust is a trust that contains the assets of the disabled individual.The self-settled trust allows a disabled individual, under the age of 65, to place their own funds into a special needs trust, but it must be established by a parent, grandparent, legal guardian or court. The individual cannot establish the trust himself. In addition the self-settled trust is required to have a payback provision, meaning that upon the disabled individual’s death, Medi-Cal must be repaid for any benefits used by the recipient before any amount can be distributed to the individual’s heirs.

Once the special needs trust is in place, regardless if it is a third-party or first-party, the assets in the trust will be available to supplement the individuals benefits. While trust assets cannot be paid directly to the beneficiary, the assets in the special needs trust will provided the needed support they require to live a quality life to the best of their ability.

Once the special needs trust is in place, regardless if it is a third-party or first-party, the assets in the trust will be available to supplement the individuals benefits. While trust assets cannot be paid directly to the beneficiary, the assets in the special needs trust will provided the needed support they require to live a quality life to the best of their ability.

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