| name | third-party-snt |
| title | Third-Party Special Needs Trust |
| description | Drafts irrevocable third-party Special Needs Trusts funded by parents, grandparents, or other non-beneficiary parties to supplement government benefits without triggering Medicaid payback obligations. Use when drafting supplemental needs trusts, third-party SNTs, estate planning disability trusts, special needs trust agreements, or any trust intended to preserve SSI/Medicaid eligibility for a disabled beneficiary using third-party assets. Also trigger when the user asks about permissible SNT distributions, in-kind support and maintenance rules, ABLE account coordination, or remainder beneficiary planning for disability trusts. |
| author | CaseMark |
| author_url | https://github.com/CaseMark/skills/tree/main/skills/legal/third-party-snt |
| license | Apache-2.0 |
| version | 0.1.0 |
| execution_mode | open |
| jurisdiction | us |
| practice | trusts-and-estates |
| language | en |
| tags | ["agreement","drafting","transactional"] |
Third-Party Special Needs Trust
Why This Skill Exists
Third-party SNTs fail for two reasons: they contain language that causes the trust corpus to be treated as an available resource for public benefits purposes, or they make distributions that constitute in-kind support and maintenance (ISM) and reduce or eliminate SSI. A trust that pays rent directly to a beneficiary's landlord without cost-benefit analysis can cost the beneficiary their entire SSI check. A trust that omits the spendthrift clause can be reached by creditors.
This skill produces a jurisdiction-aware, irrevocable third-party SNT that preserves SSI and Medicaid eligibility, uses solely supplemental distribution standards, requires no Medicaid payback at termination, and includes trustee guidance on ISM avoidance. The primary distinction from first-party/self-settled SNTs (42 U.S.C. § 1396p(d)(4)(A)) is that no payback provision is required or included — this trust holds assets that never belonged to the beneficiary. [VERIFY state-specific treatment of third-party SNTs under applicable Medicaid manual]
Checkpoint A: Pre-Draft Intake (Mandatory)
Gather before drafting unless user says "use defaults":
- Grantor — full legal name, relationship to beneficiary, state of residence
- Beneficiary — full legal name, DOB, nature of disability, current benefit programs (SSI, Medicaid, SSDI), specific supplemental needs
- Trustee — individual vs. corporate fiduciary, successor trustees, willingness to serve
- Funding plan — immediate (asset schedule) or deferred (life insurance, retirement account beneficiary designation, pour-over from will)
- Remainder beneficiaries — primary and contingent with shares/percentages
- Jurisdiction — state trust execution formalities, state Medicaid manual rules for third-party SNTs
- ABLE account eligibility — disability onset before age 26; if eligible, whether trustee should have authority to fund ABLE account
- Tax posture — grantor vs. non-grantor trust preference; gift tax strategy (Crummey powers vs. lifetime exemption)
If user doesn't respond, apply and label defaults: sole and absolute discretion standard; no Crummey powers; non-grantor trust; standard spendthrift and anti-alienation; state-neutral template with [VERIFY JURISDICTION] flags on execution formalities.
Step 1: Validate Intake and Map State Law
Required Deliverable: State-Law Scaffold
