What is a Special Needs Trust?
A Third Party Special Needs Trust is one created and funded by someone other than the beneficiary such as a parent or grandparent (also know as the Settlor).

Generally, a Special Needs Trust is designed and administered so as to allow the dignity and quality of life of the beneficiary to be maintained and also enhanced with supplemental funds, without putting at risk their primary means of financial survival, their Social Security or Medicaid benefits.

The two components of the trust are namely the trustee and the beneficiary. The beneficiary is the disabled child who stands to benefit from the trust. The trustee is someone who is assigned legal responsibility over the trust and distributes the funds for the benefit of the beneficiary only. Beneficiaries cannot themselves withdraw money from their fund and the trustee cannot withdraw money for their own benefit. This measure not only protects the beneficiary from manipulation and abuse, but also demonstrates to third parties such as the government that the beneficiary has no control over their funds. It is imperative that trust funds not be considered as a resource available to the beneficiary, as this could terminate government benefits. In order for the trust funds to be deemed unavailable to the beneficiary, the trust must be carefully drafted to include special provisions.

Personal Injury Settlements
When an individual becomes permanently disabled as a result of an accident many legal questions must be resolved. For instance, how does one structure a personal injury settlement so that the disabled person can still obtain Medicaid and Social Security Income (SSI). Personal injury settlements can disqualify the individual from receiving Social Security and Medicaid benefits if not structured properly, which could lead to devastating results for the disabled person.

Personal injury settlements can be placed into a trust established under 42 U.S.C. 1396p(d)(4)(A), also known as a "special needs trust", or "payback trust". What distinguishes a special needs trust from any other self-settled trusts is that under Medicaid, a self-settled trust is considered an available resource, while a special needs trust has been statutorily approved by Congress as a non-available resource when drafted and administered properly.