If you have a family member with special needs, it could be worth setting up a special needs trust. Special needs trusts, or SNT’s as they’re called for short, are trusts set up for someone with special needs that can supplement the benefits that person may typically receive from government programs. If handled properly, the individual the trust is set up for can take advantage of both the trust and government assistance and the SNT can be used for a variety of expenses that may improve their quality of life. One of the most important things to know about special needs trusts is that there are multiple options to choose from, with each option having various benefits that might better fit your situation. Read on for more information about both First-party and third-party trust options.


When a person who doesn’t have special needs sets up an SNT for someone who does, it’s called a third-party special needs trust. In most circumstances, this will be the parents of the individual who the trust is made for but practically anyone can set up one of these trusts other than the beneficiary themselves. Aside from the standard stand-alone third-party SNT, they can also be included in a Last Will and Testament or within an inter vivos trust that is meant to avoid probate. In many circumstances, a stand-alone third-party SNT can be more useful, especially if there are multiple donors who desire to contribute. This is due to how SNTs that are made under a Will or subtrust within a living trust don’t actually come into existence until the death of the person who created the SNT. Ultimately, these types of SNTs are great for anyone who wants to plan for the future of a beneficiary with special needs while also staying in control of the assets upon the beneficiary’s death.


If a person with special needs inherits money or property, or if they receive a settlement from the court, you’ll want to look into using a first-party SNT. For most of the history of first-party SNTs, only the parents, legal guardians, grandparents, or the court were able to create an SNT for the beneficiary. As of 2016 and the passing of the Special Needs Trust Fairness Act, beneficiaries themselves are able to set them up as long as they’re mentally and legally competent. These SNTs are usually funded with property that belongs to the beneficiary, or to which they become legally entitled. Individual first-party SNTs can only be created and funded for those who are considered “disabled” under the government’s definition as well as being under 65 years of age.