S.C. Code § 62-5-433(A)(2) VIII. SPECIAL NEEDS TRUSTS (“SNT”) (Also called “SUPPLEMENTAL NEEDS TRUSTS” or “d(4)(A) Trusts”) (Use this information also for “Pooled Fund Trusts”)
Both SNTs and Pooled Fund Trusts are statutorily authorized trusts. 42 U.S.C. 1396 d(4) (A) authorizes Special Needs Trusts, and 42 U.S.C. 1396 d(4) (C) authorizes Pooled Fund Trusts.
Use of Trusts and background rational: These trusts allow a disabled minor or disabled adult who receives certain governmental benefits to continue to be eligible for the benefits2 even if the individual is awarded and receives settlement proceeds from civil actions, by way of inheritance, or by other funding sources. Normally, the receipt of additional proceeds would disqualify the individual from being eligible for governmental benefits. SNTs and Pooled Fund Trusts carve out an exception which allows the individual both to receive the proceeds and to maintain eligibility for governmental benefits.
The premise behind a SNT and Pooled Trust is that the “extra” proceeds from the civil action or inheritance are available for specific supplemental items or supplemental assistance to the special needs individual. That is, the “extra” trust funds can be used to pay for things that are above or in addition to the items provided by governmental benefits. To that end, the funds in the SNT or Pooled Trust can be used by the Trustee to purchase goods or pay for services for the special needs individual (hereinafter the “Trust Beneficiary” or “Beneficiary”) that would not normally be covered by governmental benefits (anything from medications not covered by Medicaid to a home to a vacation—items considered “extra” to what is provided by the governmental benefits) . . .
The Supreme Court of South Carolina, Revised Minor Settlement Procedure, 2011-07-26-01.