A Comprehensive Summary
Updated May 2026
Introduction and Definition
A Special Needs Trust (SNT) is a specific type of trust designed to hold assets for a person with a disability. These trusts are structured so that the funds are not counted as available resources when determining eligibility for means-tested programs like Medicaid and SSI. This allows the beneficiary to receive supplemental support — such as personal care attendants, therapy, education, and recreational activities — without risking their government assistance.
Types of Special Needs Trusts
Ohio recognizes three main types:
First-Party (Self-Settled) Special Needs Trusts
A first-party trust is funded with money that already belongs to the person with special needs, often from an inheritance or legal settlement. The beneficiary must be under age 65 and funding comes from their own assets. These trusts require a Medicaid payback provision at the beneficiary’s death.
Third-Party Special Needs Trusts
The grantor may be anyone other than the beneficiary. Funding these trusts with the disabled person’s assets should not result in a transfer of asset penalty under Ohio’s Medicaid program. Third-party trusts do not carry a Medicaid payback requirement, making them the preferred vehicle when family members (e.g., parents) are contributing funds.
Pooled Special Needs Trusts
In Ohio, Community Fund Ohio (formerly known as Community Fund Management Foundation) and Disability Foundation offer Master Trusts. A Master Trust is wholly discretionary, funded only with third-party funds, and offers trustee services for smaller trusts that an institutional trustee normally might not take. These Master Trusts are very helpful for families with no one to serve as trustee or successor trustee.
Ohio currently allows pooled trusts to be established and funded after the beneficiary reaches the age of 65. However, for the SSI program, a special needs or pooled trust cannot be created for someone 65 and older; otherwise, it constitutes an improper transfer under the SSI program.
Requirements for Legal Compliance
For assets in an SNT to be non-countable for Medicaid/SSI purposes, the disabled beneficiary cannot serve as trustee, cannot have the right to withdraw assets from the trust, and distributions may be made to the disabled beneficiary only in the sole and absolute discretion of the trustee without an ascertainable standard such as health or support. A common way this is stated is that the trust is intended to “supplement, not supplant, impair, or diminish” public benefits to which the disabled person may otherwise be entitled.
Ohio law also provides that a trust that is otherwise determined to be countable will not be countable if it contains a provision requiring that, if the trust is ever determined to be countable, the trustee is required to take corrective action — a protective “savings clause” unique to Ohio planning practice.
Statutory Cap on Certain Trust Types: The creation of certain trusts cannot exceed the maximum amount stated in Ohio Revised Code — $220,000 in 1995 and an additional $2,000 every year thereafter ($280,000 in 2025).
Limitations on Disbursements
The trustee has discretion to make distributions for almost any purpose to the extent such needs are not being provided for by Medicaid or SSI, including for supplemental medical care, entertainment, transportation, travel, and retrofitting of a house or vehicle.
Two important distinctions regarding government benefit impacts:
- Food: The trust can pay for groceries without reducing SSI. This changed in October 2024 — before that, buying food with trust money cut the SSI check. It doesn’t anymore.
- Housing: The trust paying for housing does still reduce SSI. Rent, mortgage, utilities — if the trust pays those, the SSI check goes down (up to about $342/month in 2026).
Ancillary Issues
Medicaid Payback
First-party SNTs require that upon the beneficiary’s death, Ohio Medicaid is repaid for benefits paid during the beneficiary’s lifetime before any remaining funds pass to heirs. Third-party trusts carry no such requirement.
Ohio’s STABLE Account (ABLE Program)
Ohio’s STABLE savings accounts don’t require Medicaid payback at death. Ohio enhanced this protection in its 2025 budget bill. A beneficiary can save up to $100,000 in a STABLE account without jeopardizing SSI, receive a state tax deduction on contributions, and when they pass, the remaining money goes to the family — not to Medicaid.
It is often advantageous to use complementary planning techniques, such as an ABLE account (known as a STABLE account in Ohio), the purchase of exempt assets, the purchase of Medicaid-compliant annuities, and gifting strategies that take into account and avoid the pitfalls of the five-year lookback period.
Administration and Oversight
One of the most consequential — and often underappreciated — decisions in SNT planning is who will manage the trust and how the administrative responsibilities will be divided. Many default to naming an individual or entity as the sole trustee. While well-intentioned, this approach carries significant risks that can be avoided by separating the trustee and administrative roles and placing them with qualified professionals.
The Complexity of the Role Demands Expertise
Specialized knowledge is needed to succeed in the role. The job is far more demanding than most people realize. The basic fiduciary requirements include: maintaining detailed records, never co-mingling trust assets with the trustee’s personal assets, investing the trust assets prudently, and filing all required income tax and distribution reports on time. On top of these baseline duties, an SNT trustee must also navigate a web of ever-changing public benefits rules. Government entitlement programs such as SSI, Medicaid, and HUD Housing have detailed requirements regarding SNT distributions. A wrong move can disqualify the beneficiary for benefits, result in overpayments, or even expose the trustee to legal liability.
SNT trustees and administrators have a fiduciary duty to act in the best interests of the beneficiary. They must avoid any actions that would harm the financial or personal interests of the disabled individual. Making decisions inconsistent with the welfare of the individual with a disability breaches the fiduciary duty, making the trustee liable. A professional trustee understands this standard and operates within it daily — a family member stepping into the role for the first time does not.
Professionals Bring Specialized Knowledge That Protects Benefits
With the professionals at Medical Fund Advisors serving as administrator, you can rely on the expertise of that individual or institution. They will have a deep understanding of public benefits programs, investments, money management, and tax planning. This expertise is what stands between the beneficiary and a costly loss of Medicaid or SSI eligibility. Saving hundreds of dollars in trustee fees may seem like a great strategy; however, losing governmental benefits because the trust was administered incorrectly can be a far more costly matter.
Separating Trustee and Administrative Roles Adds a Layer of Oversight
A professional trustee handles fiduciary decision-making — investment of assets, approval of distributions, and legal compliance. Medical Fund Advisors acts as a separate professional administrator and handles the day-to-day operational duties: recordkeeping, bill negotiation and payment, and correspondence. Separating these roles creates a system of checks and balances. The trustee has fiduciary responsibility for the management of trust assets, even if they choose to hire professional investment managers to make day-to-day investment decisions. When these functions are handled by different professionals, neither party operates in isolation, reducing the risk of error or self-dealing.
Institutional Continuity Matters Over a Lifetime
A beneficiary may depend on their SNT for decades. Family member trustees age, move, become ill, predecease the beneficiary, or simply burn out. If an older relative is being considered as trustee, it would be wise to also appoint a younger “successor” trustee so that the trust can be administered without interruption. A professional trustee institution — a bank trust department, nonprofit, or specialty firm — has built-in continuity that no single family member can guarantee.
The Recommended Structure
The best practice for most Ohio SNTs is a layered approach: a professional trustee makes fiduciary decisions, a separate professional administrator handles day-to-day operations and recordkeeping, and a trusted family member serves as trust protector — empowered to review accounts and remove or replace the professional trustee if needed. The role of the Trust Protector is to remove the existing professional trustee and replace them with a new professional trustee should the need arise. This removal power is not allowed to be granted to the beneficiary of an SNT. This structure keeps family members meaningfully involved while placing the legal and technical burdens where they belong — with professionals trained to carry them.
Ohio Idiosyncrasies
- Ohio’s “savings clause” rule allows a trust that would otherwise be countable to remain non-countable if it includes a mandatory corrective action provision.
- The beneficiary’s own assets cannot be used to fund a third-party SNT.
- Ohio’s entire DD (Developmental Disabilities) waiver system is being modernized, and a trust drafted several years ago may already be working against a family’s interests. Regular review with a qualified Ohio special needs attorney is strongly recommended.
- Court approval may be required in guardianship contexts: when a Special Needs Trust is created within guardianship proceedings, a judge reviews and must sign off on the proposed trust before it takes effect.
Disclaimer: This summary is for general informational purposes only and does not constitute legal advice. Ohio special needs law is complex and changes frequently. Families should consult a qualified Ohio attorney specializing in special needs and disability planning.