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Understanding a Special Needs Trust

Special Needs Trust: A Complete Guide

Understanding a special needs trust “SNT” is crucial for individuals seeking to protect the financial well-being of loved ones with disabilities. This paramount step safeguards their eligibility for government benefits while providing long-term financial security.  We will explore the significance of specialneeds trusts and how they offer individuals with special needs security and protection.  Join us as we delve into the world of specialneeds trusts and discover the remarkable benefits they provide.

What is a Special Needs Trusts 

A special needs trust, also known as a supplemental needs trust.  It is a legal arrangement designed to protect and manage the assets and income of an individual with disabilities. Its purpose is to meet the unique needs of individuals with special needs. It also ensures their eligibility for government benefits like Medicaid and SSI.

The Benefits of a Special Needs Trust

First and foremost, a SNT preserves eligibility for government benefits. Additionally, it enables individuals with special needs to maintain a higher quality of life by supplementing their government benefits. Moreover, it safeguards assets and income for the long-term care and support of the individual, providing financial security. Both the individual with special needs and their loved ones gain peace of mind, knowing that their financial future is protected.

Types of Special Needs Trusts

Different types of SNT cater to various circumstances.

A first-party special needs trust is a way to keep money safe for someone who has a disability and needs help. This money usually comes from the person with the disability themselves. It can be money they already have or things they’ll get in the future, like an inheritance or a lawsuit settlement. The money in this trust can only be used to help the person with the disability. After they pass away, the trust has to give some of the money back to a program called Medicaid, if they used it. Only after Medicaid gets its share can the rest of the money go to others.

A third-party special needs trust is also a way to keep money safe for someone with a disability. But the money in this trust comes from someone else, like a family member. This kind of trust is often used by parents or guardians who want to make sure the person with the disability has what they need in the future. When the person with the disability passes away, the money doesn’t have to go back to Medicaid. Instead, the person who made the trust can say who gets the money next.

A pooled special needs trust is like a special bank account that many people with disabilities put their money into. This helps them keep their money safe and even make it grow. The group that takes care of the trust knows how to invest the money to make it more over time. This is helpful because it can be hard to manage money on your own when you have a disability. The trust can also help pay for things that the person with the disability needs, like medical care or things that make life better. When the person passes away, any leftover money in the trust usually helps other people in similar situations.

Steps to Establishing a SpecialNeeds Trust

  1. Someone to Help: You need to talk to a person who knows about the rules and laws for making this kind of trust. They can be a special kind of lawyer or expert.
  2. Decide What You Want: You need to think about what you want the money to be used for. This could be things like medical care, school, or things that make life better.
  3. Pick a Person to Help: You have to choose someone you trust a lot. This person is called a “trustee.” They will be in charge of the money and making sure it’s used the right way.
  4. Put the Plan on Paper: You need to write down all your wishes and the rules for the trust on paper. This paper is called a “trust document.”
  5. Follow the Rules: You need to make sure everything you’re doing follows the rules and laws. This way, the trust can work the way you want it to.

Remember, a special needs trust is like a special account that helps people with disabilities. It’s a way to keep money safe and use it for the right things

Advantages of Establishing a Special Needs Trust

  • Preserving Eligibility for Government Benefits:

    • An SNT allows individuals with disabilities to maintain eligibility for crucial government benefits.
    • Placing assets and income into the trust ensures these resources are not considered personal means for means-tested programs.

    Ensuring Long-Term Financial Security:

    • Supplemental needs trusts establish a reliable outline for managing and disbursing funds on behalf of individuals with special needs.
    • This ensures their lifetime financial needs, including medical expenses, therapy, education, housing, and transportation, are met.

    Supplementing Government Benefits:

    • Government benefits may not cover all expenses associated with caring for a person with special needs.
    • Specialneeds trusts enable additional funds to supplement these benefits, providing a higher quality of life and greater opportunities for the beneficiary.

    Protecting Inheritance and Gifts:

    • Inheritance or gifts received by individuals with special needs can potentially affect their government benefits eligibility.
    • Placing these assets in a supplemental needs trust safeguards the funds and allows them to be utilized for the beneficiary’s benefit without compromising eligibility.

Creating a Special Needs Trust

Establishing a supplemental needs trust involves careful planning and adherence to legal requirements. Here are the key steps involved:

  • Consult with an Attorney:

    Seek guidance from an experienced attorney specializing in special needs planning. They will ensure the trust is drafted in compliance with relevant laws and tailored to the specific needs of the beneficiary.

  • Select a Trustee:

    Choose a trustworthy and capable trustee responsible for managing the trust funds and making distributions in line with the beneficiary’s needs and best interests.

  • Determine Funding Sources:

    Decide on the sources of funding for the trust, such as assets, life insurance policies, or inheritances. Consider the long-term financial requirements of the beneficiary.

  • Provide Detailed Instructions:

    Clearly outline the intended use of the trust funds and specify the types of expenses that can be covered. This helps guide the trustee in making appropriate distributions.

  • Periodic Review:

    Regularly review and update the trust as necessary to ensure it remains aligned with the beneficiary’s evolving needs and changes in applicable laws.

Register Your Trust for Added Protection and Accessibility

Registering a special needs.trust with The U.S. Will Registry provides an extra layer of protection and ensures its seamless administration. Registration is free and by taking this proactive measure, you can minimize the risk of the trust going unnoticed or being misplaced, offering peace of mind to you and your family. Registering with The U.S. Will Registry enhances the accessibility of the trust, guaranteeing that your intentions are honored and your loved one’s needs are met according to your carefully crafted plan.

The Importance of Trust Registration

Registering your special.needs trust with The U.S. Will Registry offers several key benefits:

1. Enhanced Protection:

By registering your trust, you create a verifiable record that helps protect against potential disputes or challenges. It provides an additional layer of security, ensuring that your trust’s existence and details can be easily verified.

2. Easy Location and Retrieval:

Registering a trust with The U.S. Will Registry simplifies the process of locating it when needed. Rather than relying on potentially scattered or forgotten documentation, the registry acts as a centralized repository, making it easier for your loved ones to find the trust and carry out your wishes.

3. Peace of Mind:

Registering the trust provides peace of mind, knowing that it is securely recorded and can be accessed when necessary. This knowledge alleviates concerns about the trust’s whereabouts and guarantees that your loved ones can effectively manage the trust in the future.


A supplemental needs trust provides financial security and peace of mind for individuals with special needs. By planning carefully, families ensure long-term financial well-being. Register the trust with The U.S. Will Registry for added protection and organization. Explore special needs trusts for a brighter future. Consult a specialized attorney to understand the intricacies. A well-planned SNT offers peace of mind for your loved one’s financial security.

Special Needs Trusts Terminology


The accounting explains trust activity for a specific time period and can be simple or detailed.  Therefore, it is prepared by the trustee, an accountant, or an attorney hired by the trustee.


The beneficiary is the person for whom the trust is established. In first-party SNTs, the beneficiary must be disabled according to the Social Security Administration. In some states, third-party SNT beneficiaries must also have a disability.

Bond or Surety:

A trustee may need a bond, which acts as insurance against fraud, negligence, or loss of trust assets. The bonding company reimburses the trust for any losses caused by the trustee.


Trustees are usually entitled to compensation for their services, unless stated otherwise in the trust agreement.  However, the amount is often determined by state law and considered taxable income for the trustee.


First-party SNT beneficiaries must have a disability recognized by the Social Security Act. The SSA’s website provides a comprehensive list of recognized disabilities for adults and children.


The grantor creates and funds the trust, also known as a settlor or trustor. Therefore, in first-party SNTs, the grantor is the beneficiary, while in third-party SNTs, it is typically a parent or family member.

Inter vivos:

Inter vivos trusts are established during the grantor’s lifetime. All first-party SpecialNeeds Trusts fall under this category, while inter vivos third-party SNTs can be revocable or irrevocable.


Irrevocable trusts cannot be changed or revoked. First-party SNTs must always be irrevocable, but third-party SNTs can be either irrevocable or revocable.

Remainder Beneficiary:

When the trust ends, the remainder beneficiaries receive any remaining trust assets. In first-party SNTs, Medicaid is typically the first remainder beneficiary, while in third-party SNTs, the grantor decides the remainder beneficiaries (excluding Medicaid).


Revocable trusts can be changed or revoked by the grantor. Only third-party SNTs can be revocable, but they often become irrevocable upon the grantor’s death.

Schedule A:

Schedule A, also called a schedule of assets, lists all the assets owned by the trust. It is important for the trustee to keep this schedule updated.

Successor Trustee:

A successor trustee takes over when the initial trustee is unable to serve. The trust agreement outlines the requirements the successor trustee must meet before assuming the role.


A testamentary trust is created under a last will and testament, becoming funded after the testator’s death. It can only be a third-party SNT.


The trustee manages trust assets and administers the trust provisions. They can be a family member, friend, colleague, or professional, and often multiple individuals serve as trustees simultaneously.

Trust Estate:

The trust estate includes assets placed in the trust and managed by the trustee for the beneficiary’s benefit. It encompasses income earned from invested trust assets.

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