Special Needs Trust
A legal trust that holds assets for a person with disabilities without disqualifying them from SSI, Medicaid, or other means-tested benefits.
Official source: ssa.gov
A **Special Needs Trust (SNT)** — sometimes called a Supplemental Needs Trust — is a trust funded for the benefit of a person with disabilities. Because the assets are owned by the trust (not the beneficiary), they do not count toward the **$2,000 SSI resource limit** or Medicaid asset limits.
There are three common types: a **first-party SNT** (funded with the beneficiary's own money, such as a personal-injury settlement; requires Medicaid payback at death), a **third-party SNT** (funded by parents, grandparents, or other family members; no payback required), and a **pooled SNT** (administered by a nonprofit for many beneficiaries).
SNT funds can pay for "supplemental" needs that SSI and Medicaid do not cover — things like therapies, education, travel, recreation, electronics, vehicle modifications, and a personal attendant. They generally cannot pay directly for food or shelter without reducing SSI.
SNTs are often used alongside an **ABLE account**, which offers more flexibility for everyday expenses but is capped at $19,500/year in contributions (2025) and $100,000 in total balance before affecting SSI.
Setting up an SNT requires a qualified special-needs attorney — the trust language must meet federal and state Medicaid rules to preserve benefit eligibility.
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Frequently asked questions about Special Needs Trust
Will a Special Needs Trust disqualify me from SSI?+
No, as long as the trust is properly drafted. Assets in a qualifying SNT do not count toward the $2,000 SSI resource limit or Medicaid asset limits.
What is the difference between a first-party and third-party SNT?+
A first-party SNT holds the beneficiary's own money (often a settlement) and must repay Medicaid at death. A third-party SNT is funded by family members and has no Medicaid payback requirement.
Can a Special Needs Trust pay for food or rent?+
It can, but doing so usually reduces SSI under the In-Kind Support and Maintenance (ISM) rule. Most families pay these expenses from other sources and use the SNT for supplemental needs.
How is a Special Needs Trust different from an ABLE account?+
An ABLE account is simpler and lets the beneficiary spend directly, but contributions are capped at $19,500/year (2025). An SNT has no contribution cap and is better for larger sums or settlements.
Do I need an attorney to set up an SNT?+
Yes. SNTs must comply with strict SSA and Medicaid rules. A small drafting error can disqualify the beneficiary from benefits, so use a special-needs attorney.
Source: ssa.gov