Third Party SNT

Trusts

What distinguishes a third-party supplemental needs trust from a first-party supplemental needs trust is the source of funds used to establish the trust. A third-party supplemental needs trust is funded with assets belonging to someone other than the disabled beneficiary. Third-party supplemental needs trusts are more common than first-party supplemental needs trusts.

Third-party supplemental needs trusts are often set up by parents, grandparents, and other family members to provide and protect funds for a disabled individual who is receiving or may receive means-tested government benefits in the future. The parents, grandparents, or other family members who set up the trust are referred to as the trust Grantors or Settlors. The Settlors have the right to choose where any remaining funds will go on the death of the disabled person. Third-party supplemental needs trust funds are not subject to recovery under payback rules after the disabled person’s death and will not be handed over to the state.

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