Special Needs Trusts: are also known as supplemental needs trusts. There are two types: First Party Trusts, which are funded with the disabled party’s own money, such as a personal injury settlement, and Third Party Trusts, which are funded by third parties, typically parents or grandparents, for the benefit of a disabled minor or adult child or grandchild. When there is a need, Third party trusts are part of a complete estate plan. They can also be established as a stand-alone “seed trust” for receipt of financial gifts and inheritances from other family members so that well-intentioned gifts do not compromise a beneficiary’s eligibility for or continued receipt of public benefits. The purpose of third party trusts is pay for “quality of life” benefits without making the recipient ineligible to continue receiving “needs based” public benefits. Needs based public benefits include Supplemental Social Security Income (SSI) and MediCal. Special needs trusts are not required for beneficiaries who receive “entitlement benefits”, such as Social Security Disability Insurance (“SSDI”). However, it is frequently wise to consider holding monetary gifts in trust for these beneficiaries, sometimes for the balance of their lives.
For first party trusts where professional management, investment and tax services are not readily available, often because trust resources are insufficient, pooled special needs trusts, which must be run by not for profit, tax-exempt corporations, are available. Each pooled special needs trust has its own fee schedule and admission fee that is paid when a beneficiary joins it and turns over his or her assets to the trustees of the pooled special needs trust. A disabled individual may join a pooled special needs trust through his or her agent acting under a properly drafted Durable Power of Attorney, his or her court-appointed conservator, or by a person acting under a court order.
It is important to remember that minor children with disabilities frequently grow into adults who possess the legal capacity to marry and divorce, receive and incur obligations for child and spousal support, and receive and lose property in marital property divisions. A marital settlement agreement 
incorporated into a family law judgment may inadvertently cause the loss of needs based public benefits and a demand from the government for repayment of benefits.
