Special Needs Trust

A third-party SNT is funded by family members, usually parents or grandparents, with their own money or through life insurance. There is no Medicaid payback at the beneficiary's death. Whatever remains can pass to other family members or charity.

A first-party (or self-settled) SNT holds the beneficiary's own assets, often a personal injury settlement or inheritance received outright. Federal law requires it to repay state Medicaid programs at the beneficiary's death before any remainder can pass to family.

Trustees can use SNT funds for almost anything besides food and shelter (which would reduce SSI). Common uses include medical care not covered by Medicaid, therapy, transportation, technology, vacations, education, and quality-of-life improvements. Pairing an SNT with an ABLE account often provides the best combination of long-term security and day-to-day flexibility.

Arizona enforces SNT spendthrift terms with limited statutory exceptions under A.R.S. 14-10503, which is what protects the trust from most beneficiary creditors.

For the full picture of how this term fits into an Arizona family's plan, see our Special Needs Trust Arizona: Complete Guide. Trustees can also try the free SNT Distribution Checker to log a planned expense and see whether it triggers an SSI reduction.