A special needs trust is also referred to as a supplemental needs trust. A special needs trust is a form of trust that does not impede certain governmental benefits including Social Security and Medicaid, and the protection of certain assets from the arm or reach of governmental seizure.
There are five distinct forms of special needs trusts that are categorized as either “third party” or “first party” special needs trusts.
Third party special needs trusts are generally created by a parent or grandparent or a concerned family member to benefit a disabled child, family member or heir. The purpose of the trust is to provide monies, income or financial support to the beneficiary without endangering social security, Medicaid or other governmental benefits.
A first-party special needs trust is often referred to as a “payback” trust as they are designed to pay back any Medicaid liens when the beneficiary of the trust deceases.
Pooled trusts protect the beneficiary, whether disabled or elderly when qualifying for Medicaid benefits.
