What is a special needs trust or supplemental needs trust?

A special needs trust (also known as a supplemental needs trust or SNT) is a trust which is set up to retain assets for the benefit of a disabled person. Usually though not always, the trust is drafted in such a way as to preserve the disabled person’s eligibility for public benefits such as Supplemental Security Income (SSI), MediCal, and Alta California Regional Center benefits. Ideally, the trust is also drafted to be sure that the disabled person has a support system available to him or her during his or her lifetime. The goal of the special needs trust is to provide the highest possible standard of living for that person through the maintenance of public benefits and the prudent management and judicious use of the trust assets. On the death of the disabled person, the trust estate is distributed as provided for in the trust.
There are two basic types of SNTs: a first party trust, which is established using the assets belonging to the disabled person, and a third party trust, which is established using someone else’s assets, such as the assets of a parent or grandparent. Third party trusts may be established during the lifetime of the grantor (such as the parent or grandparent), or may be funded or established on the death of the grantor through his or her trust or will.
For information regarding pooled trusts, please go to the website for Golden State Pooled Trust, at www.gspt.org.