Elder Law
First-Party & Third-Party Special Needs Trusts
Thoughtful planning that supports a loved one with a disability for life, while helping protect the benefits they rely on.
Caring for a Loved One, Now and Later
If someone you love has a disability, you have probably spent years learning how to advocate for them. One of the most common worries we hear from parents, grandparents, and siblings is simple: what happens when we are no longer here?
Many people with disabilities rely on needs-based programs such as Supplemental Security Income (SSI) and Medicaid. Those programs have strict limits on what a person can own. A well-meaning inheritance, a lawsuit settlement, or even a large gift paid directly to your loved one can put those benefits at risk.
A special needs trust holds money for the person’s benefit without giving them direct ownership. A trustee uses the funds for things that improve quality of life — therapies, education, equipment, travel, and more — in a way designed to work alongside public benefits rather than replace them. We take time to learn about your loved one, their needs, and your hopes for their future. Then we help you choose the right type of trust and a trustee you can count on, so you can feel confident your loved one will be cared for.
What We Handle
- First-Party Special Needs TrustsFor assets that belong to the person with a disability, such as an inheritance received directly or a settlement.
- Third-Party Special Needs TrustsFunded by parents, grandparents, or others as part of their own estate plan.
- Estate Plan CoordinationUpdating wills, trusts, and beneficiary designations so gifts go to the trust, not directly to your loved one.
- Trustee GuidanceHelping trustees understand how to use funds in a way that respects benefit rules.
- Guardianship PlanningConsidering whether guardianship or less restrictive alternatives make sense as a child reaches adulthood.
- Letters of IntentEncouraging families to record routines, preferences, and care details for future caregivers.
Common Funding Scenarios
Parents’ estate plan
Parents name a third-party trust in their wills or living trust so their child’s share is held safely.
Life insurance
A life insurance policy names the trust as beneficiary to provide long-term support.
Unexpected inheritance
A relative leaves money directly to the person, and a first-party trust may help protect benefits.
Settlement or back pay
A personal injury settlement or other lump sum is placed in a first-party trust.
How It Works
- 1
Get to Know Your Family
We learn about your loved one, the benefits they receive or may need, and what you want their future to look like.
- 2
Choose the Right Trust
We explain whether a first-party trust, a third-party trust, or both fit your situation, and who should serve as trustee.
- 3
Create & Coordinate
We draft the trust and update related documents and beneficiary designations so everything works together.
Questions & Answers
Frequently Asked Questions
A first-party trust holds assets that belong to the person with a disability. These trusts typically must include a payback provision to Medicaid after the beneficiary’s death. A third-party trust holds assets from someone else, like a parent, and generally does not require a Medicaid payback, so remaining funds can pass to other family members.
Anyone who wants to leave money to a person with a disability who receives, or may someday need, needs-based benefits such as SSI or Medicaid. It is also important when a person with a disability receives an inheritance or settlement directly.
A family member, a trusted friend, a professional, or a combination. The trustee should be organized and willing to learn the rules about how funds can be used. We help families think through this choice.
Generally, items and services that improve quality of life beyond what benefits provide, such as therapies, education, recreation, travel, equipment, and personal care. Some types of payments can affect benefits, so trustees should get guidance.
Yes. A third-party special needs trust can receive gifts and inheritances from anyone. We recommend that relatives update their own wills and beneficiary designations to name the trust.
ABLE accounts are another tool that can help some people with disabilities save without losing benefits. They have their own limits and rules. Depending on your situation, an ABLE account may work alongside a special needs trust.
Plan for Your Loved One’s Future
You have spent years caring for them. Let us help you create a plan that keeps caring for them long into the future.
