A special needs trust holds assets for a disabled person without disqualifying them from government benefits. First-party trusts use the disabled person's own money, like lawsuit settlements. Third-party trusts are funded by family members to supplement public benefits.
A trust is frequently used to take care of a disabled child or a disabled relative. A person with a disability is commonly eligible for significant government benefits. If that disabled person receives anything of value, it will likely disqualify them from receiving those government benefits. To avoid that from happening, a trust is often established called a special needs trust or sometimes a supplemental needs trust. And the money from that trust would be used to supplement their government benefits rather than to replace their government benefits. If that trust is created properly and the funds are used in that way, it will avoid the disqualification of government benefits. There are typically two different kinds of special needs trusts. One is a first-party special needs trust, and the other is a third-party special needs trust. First-party special needs trust is where the funds that go— that are going in the trust come from the individual who is disabled. For instance, they may have gotten a settlement from a lawsuit, which would create the funds to go in their special needs trust. A third-party special needs trust would be when someone
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