U.S. Code on Special Needs Trusts

Below you’ll find a breakdown of the three primary types of Special Needs Trusts—Pooled, First-Party, and Third-Party—along with the relevant U.S. Code citations and key details for each.

Pooled Trusts

Legal Reference: 42 U.S. Code § 1396p(d)(4)(C)

• Managed by a non-profit association.

• Each beneficiary has a sub-account; funds are pooled for management.

• Can be established by the individual, parent, grandparent, legal guardian, or a court.

• Remaining funds may stay with the trust or be used for Medicaid reimbursement.

• Allows individuals with disabilities to retain Medicaid/SSI eligibility.

First Party 

Legal Reference: 42 U.S. Code § 1396p(d)(4)(A)

• Funded with the beneficiary’s own assets (e.g., inheritance or settlement).

• Must be established by the individual, parent, grandparent, legal guardian, or a court.

• Beneficiary must be under 65 and meet the SSA definition of disabled.

• Trust must be irrevocable and solely benefit the individual.

• Medicaid reimbursement required upon the beneficiary’s death.

Third Party 

These do not appear in that U.S. Code section or any federal statute directly. Instead:

• Funded by someone other than the beneficiary (e.g., family).

• Can be set up during life or via a will.

• No Medicaid payback requirement.

• Allows greater flexibility in distributions and naming of remainder beneficiaries.

• Protects public benefit eligibility while supporting long-term care.