What Every Estate Planning Attorney Needs to Know About Medicaid Planning

Session 4: First-Party Special Needs Trusts (Self-Settled SNTs)

By: May-Lis Manley, Esq. of Landsman Law Group & Denise Fike, First Maryland Disability Trust 
February 5, 2026

May-Lis Manley and Denise Fike provided a detailed, practice-oriented analysis of first-party (self-settled) special needs trusts as a critical tool in crisis Medicaid planning. Their presentation focused on how these trusts preserve eligibility when a beneficiary already owns assets and must act quickly to avoid disqualification.

• Core Purpose & Use Case: emphasized that first-party SNTs are used when the beneficiary’s own assets (inheritance, settlement, bank funds, guardianship funds) would otherwise disqualify them from Medicaid or SSI.
• Threshold Question – “Whose Money Is It?”: clarified that if funds belong to the applicant/recipient, a first-party SNT is required; if funds come from third parties, proper pre-planning with a third-party SNT avoids the limitations of first-party trusts.
• Two Structures: distinguished between standalone (d)(4)(A) trusts—subject to age 65 funding limits—and pooled (d)(4)(C) trusts, which allow funding at any age and are administered by nonprofit organizations.
• Mandatory Compliance Requirements: outlined strict rules: irrevocability, sole benefit of the beneficiary, no beneficiary control, limited permissible grantors, and required Medicaid payback provisions.
• Funding Timing Is Critical: stressed that assets must often be transferred into the trust within the same month received to avoid loss of SSI or Medicaid eligibility, particularly in inheritance or lump-sum scenarios.
• Establishment vs. Funding Distinction: highlighted the two-step analysis—who can create the trust (individual, parent, guardian, court) and who has authority to transfer assets (capacity, POA, guardian, or court order).
• Court Involvement & Practice Nuances: discussed when court orders are required (e.g., no authorized grantor, certain guardianships, or D.C. conservatorship practice variability), including strategies to minimize court supervision where possible.
• State-Level Administration Differences: compared Maryland and D.C. practices, including Maryland’s additional compliance requirements, annual accounting expectations, and more complex Medicaid lien/payback process.
• Medicaid Payback Challenges: warned that final Medicaid liens can take up to a year to resolve, delaying trust termination and distributions, and requiring practitioners to manage client expectations carefully.
• Practical Administration Issues: covered trustee responsibilities, benefit coordination, documentation requirements, and common pitfalls with Social Security reporting and representative payee transitions.

Their presentation clarified the technical and procedural complexities of first-party special needs trusts, equipping practitioners with a clear framework for navigating high-stakes, time-sensitive Medicaid eligibility issues in real-world crisis planning scenarios.