Self-Settled Special Needs Trusts come in two varieties, non-Pooled and Pooled. A non-Pooled Special Needs Trust (also known as a Payback Trust (d)(4)(A) trust, Self-Settled Trust, or a First Party Trust) is established for one Trust beneficiary, and the Trustee can be anyone who is qualified to act as Trustee. This is the kind of Trust most people refer to when they use the term Special Needs Trust. A Payback Trust enables a person with a disability to protect his or her assets if they receive an inheritance or lawsuit settlement, while still preserving their eligibility for essential lifelong supports.
If all the funds in the Payback Trust have not been spent by the time the individual with a disability passes away, the remaining funds are first used to “pay back” the state(s) for the cost of providing Medicaid services to the individual. Following this payback, any remaining funds are distributed according to the trust document. Beneficiaries can leave these funds for family members, friends or charitable organizations.