Supplemental Needs Trusts

A supplemental needs trust refers to types of trusts for persons with special needs who are also recipients of important public benefit programs such as Medicaid and supplemental security income (SSI). The primary purpose of these trusts is to make assets available for the benefit of a person with disabilities without making the assets count towards that beneficiary’s eligibility for social welfare programs such as Medicaid. 

Supplemental needs trust can be a third party supplemental needs trust. This trust is created by a third party (not by the disabled individual) and funded with assets of that third party. The third party who creates and funds the trust is usually a parent or grandparent for the benefit of a disabled child or grandchild.

The second type of supplemental needs trust is a self-funded trust, also referred to as a "self-settled" trust because it is created by the person with the disabilities and funded with his or her own funds. With this trust, when the personwith disabilities dies, the trust must reimburse the state for any medical expenses paid by the state to the person under the Medicaid program.