There are two types of supplemental needs trusts:
- A Third Party Supplemental Needs Trust can be created by anyone except the individual with disabilities. The funds deposited into the trust come from someone other than the individual with disabilities. The grantor or creator of this type of trust can designate who receives the balance of the funds in this trust upon the death of the beneficiary.
- A First Party Supplement Needs Trust or Medicaid Payback Supplemental Needs Trust is funded with assets owned by the individual with disabilities. Most often these funds are the proceeds of a medical malpractice or personal injury lawsuit. This type of trust can only be established by a parent, grandparent, legal guardian or court. Medicaid is reimbursed for all the funds expended on behalf of the individual with disabilities upon the death of the beneficiary.