Special Needs / Supplemental Needs Trust (SNT)
Holds assets for a beneficiary with a disability without disqualifying them from means-tested benefits like SSI and Medicaid. Three flavors: third-party (from someone else's money), first-party / d4A (from the beneficiary's own money), and pooled / d4C.
A special needs trust () provides for a person with a disability while preserving their eligibility for means-tested public benefits — Supplemental Security Income (SSI), Medicaid, housing assistance. These programs have strict asset and income limits; owning even a modest inheritance can end eligibility.
Three types:
- **Third-party SNT** — funded with someone else's money (parents, grandparents, other relatives) for the benefit of the person with a disability. No Medicaid payback required on the beneficiary's death. This is the one most parents set up.
- **First-party / self-settled / d4A SNT** — funded with the beneficiary's own money (personal injury settlement, inheritance received outright). Must be established before the beneficiary turns 65. Required Medicaid payback on death. Named after 42 U.S.C. § 1396p(d)(4)(A).
- **Pooled / d4C SNT** — funded with the beneficiary's own money but managed by a nonprofit that pools the funds with other SNT beneficiaries. Useful for smaller amounts where a standalone d4A isn't cost-effective. Payback required.
Tagged 🔴 because the drafting requirements are specific (must meet federal statutory criteria), the stakes are existential for the beneficiary (wrong document = loss of benefits), and this area changes with every Congressional Medicaid revision.
State-specific notes
The d4A and d4C trust structures are creatures of federal Medicaid statute. State Medicaid programs follow the federal rules with some administrative variation.
Virginia recognizes all three SNT types. Virginia Medicaid (Department of Medical Assistance Services) administers the state-level Medicaid payback claim on d4A and d4C trusts.
West Virginia recognizes all three SNT types. WV BMS (Bureau for Medical Services) administers the Medicaid payback claim.
Third-party and first-party (d4A/d4C) SNTs in Alabama are governed by the Alabama Uniform Trust Code (Ala. Code § 19-3B-101 et seq.) and coordinated with the Alabama Medicaid Agency's rules under 42 U.S.C. § 1396p. For SSI/Medicaid non-countability, the trust must conform to federal sole-benefit and Medicaid-payback (for d4A) requirements; Alabama has no state supplement that changes the federal rules. Alabama also offers the Alabama ABLE Savings Plan (alabamaable.gov) as a complementary vehicle.