First Party SNT

Trusts

First-party supplemental needs trusts are often referred to as “payback trusts.” A first-party supplemental needs trust is established with funds that belong to the disabled individual. First-party supplemental needs trusts are controlled by a federal act, the Omnibus Reconciliation Act of 1993 (“OBRA”). OBRA provides certain requirements for the funds to not be considered for eligibility of means-tested benefits.

The first-party supplemental needs trust must:

  • Benefit an individual who is disabled as defined by the Social Security Administration;
  • Benefit an individual under the age of 65;
  • Contain only the disabled individual’s own assets;
  • Be set up by a parent, grandparent, legal guardian or conservator, or a court;
  • Include a “pay-back provision” stating that upon the disabled beneficiary’s death, any state that provided Medicaid assistance to the disabled person can demand reimbursement from the trust for the amount the Medicaid agency spent assisting the disabled person.

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