A special needs trust ("SNT") is a vehicle which allows a parent (or other individual) to accumulate wealth for the benefit of an individual with special needs, without jeopardizing the beneficiary's eligibility for government assistance.
In order to qualify for certain needs-based government benefits, such as SSI (Supplemental Security Income) and Medi-Cal, strict income and asset requirements must be met. Receiving a gift or an inheritance can result in a reduction in government benefits or complete loss of eligibility for such assistance. Rather than gifting directly to a loved one with a disability, assets can be placed in a special needs trust for the benefit of such loved one, thereby preserving public assistance.
Public programs and government assistance provide only for the bare necessities of life, such as food and shelter. A special needs trust is designed to meet the supplemental needs of the beneficiary - those needs beyond food and shelter. Government benefits combined with assets held in a special needs trust can help to ensure our loved ones with disabilities have the resources available to ensure they are well provided for in our absence.
In general, there are three types of special needs trusts: (1) a third party special needs trust; (2) a first party special needs trust; and (3) a pooled special needs trusts.