Question 1

What is a third-party supplemental needs trust?

Accepted Answer

A third-party SNT is created and funded by someone other than the beneficiary — usually a parent, grandparent, or other family member. It holds assets like an inheritance or life insurance proceeds for the benefit of a loved one with a disability, without counting against their eligibility for means-tested public benefits like SSI and Medicaid.

Question 2

Can I set one up in my will?

Accepted Answer

Yes. A testamentary third-party SNT is established through your will and only takes effect upon your death. It’s one of the most common ways parents plan for a child with special needs. You can also create a standalone (inter vivos) trust during your lifetime for immediate or future funding.

Question 3

Does a third-party SNT require a Medicaid payback?

Accepted Answer

No. Unlike a self-settled SNT, a third-party trust does not have a Medicaid payback requirement. When the beneficiary passes away, the remaining trust assets can go to other family members or beneficiaries you designate.

Question 4

Who can be the trustee?

Accepted Answer

You can name a trusted family member, a professional fiduciary, a bank trust department, or a combination. Many families choose a corporate trustee for long-term management and name a family member as a co-trustee or trust advisor to help with personal decisions.

Question 5

What can SNT funds be spent on?

Accepted Answer

SNT funds can pay for supplemental needs that government benefits don’t cover — things like education, recreation, personal care attendants, transportation, electronics, vacations, and home furnishings. Distributions generally should not be made directly to the beneficiary in cash.

Question 6

What is a self-settled SNT?

Accepted Answer

A self-settled or first-party SNT (also called a “(d)(4)(A) trust” after the federal statute) is funded with the disabled individual’s own assets — typically from a personal injury settlement, inheritance received directly, or accumulated savings. It allows the individual to preserve benefit eligibility while the trust holds and manages those funds.

Question 7

Who can create one and are there age limits?

Accepted Answer

Under the Special Needs Trust Fairness Act (2016), the disabled individual themselves, or a parent, grandparent, legal guardian, or court, can establish the trust. The beneficiary must be under age 65 at the time the trust is funded.

Question 8

What is the Medicaid payback requirement?

Accepted Answer

Upon the beneficiary’s death, any funds remaining in a self-settled SNT must first be used to reimburse the state Medicaid program for benefits paid during the beneficiary’s lifetime. Only after this payback are remaining assets distributed to other beneficiaries.

Question 9

Can a personal injury settlement fund a self-settled SNT?

Accepted Answer

Yes, this is one of the most common funding sources. When a person with a disability receives a lawsuit settlement or court judgment, the proceeds can be placed into a (d)(4)(A) trust to protect ongoing SSI and Medicaid eligibility.

Question 10

What if the beneficiary is over 65?

Accepted Answer

Federal law generally prevents funding a new self-settled (d)(4)(A) SNT after the beneficiary turns 65. However, a pooled trust (managed by a nonprofit under §1917(d)(4)(C)) may accept transfers from individuals over 65 in some circumstances. Consult an attorney for guidance specific to your situation.

Question 11

What is a Miller Trust?

Accepted Answer

A Miller Trust (also called a Qualified Income Trust or QIT) is an irrevocable trust used to help individuals qualify for Medicaid long-term care benefits when their monthly income exceeds the state’s income cap. South Carolina is an “income-cap” state, meaning a Miller Trust is required when income exceeds the threshold (approximately $2,829/month in 2024).

Question 12

When is a Miller Trust needed in South Carolina?

Accepted Answer

A Miller Trust is needed when an individual’s gross monthly income (Social Security, pension, annuity, etc.) exceeds the Medicaid institutional income limit but they otherwise qualify for Medicaid coverage of nursing home or long-term care services.

Question 13

How does income flow through a Miller Trust?

Accepted Answer

Each month, the individual’s income is deposited into the Miller Trust. The trust then distributes a personal needs allowance to the individual, pays for health insurance premiums, allocates a spousal income allowance (if applicable), and pays the remaining balance to the nursing facility. Only income flows through — not assets.

Question 14

Who manages a Miller Trust?

Accepted Answer

A family member or other trusted individual typically serves as trustee. The trustee’s duties are relatively straightforward: deposit income each month and make the required distributions. The trust must be irrevocable and must contain specific language required by Medicaid regulations.

Question 15

Does a Miller Trust protect assets?

Accepted Answer

No. A Miller Trust is strictly an income management tool — it does not shelter or protect assets. Asset protection requires separate Medicaid planning strategies. The Miller Trust simply redirects income through a legal structure so the individual meets the income eligibility threshold.

Protecting your loved one's future, together.

What Is a Supplemental Needs Trust?

Third-Party SNT

Self-Settled (d)(4)(A)

Miller Trust (QIT)

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Common Questions, Plain Answers

How Can an SNT Be Funded?

Life Insurance Proceeds

Inheritances & Gifts

Personal Injury Settlements

ABLE Accounts

Real Estate

Retirement Plan Distributions

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