Special Needs Trust Fairness Act
As of December 13, 2016, competent individuals with disabilities can create their own first-party special needs trusts, instead of having to rely on others to do so for them. The Special Needs Trust Fairness Act was included in the 21st Century Cures Act, a law that includes several health-related initiatives signed into law by President Barack Obama.
First-Party Special Needs Trusts (the “SNT”) are used when a disabled individual who is currently receiving (or may receive in the future) means-tested governmental benefits like SSI and Medicaid, receives a large sum of money that jeopardizes eligibility for those benefits. This can happen in the case of an unexpected outright inheritance, proceeds from a lawsuit or personal injury settlement, or even winning the lottery. Prior to the enactment of this law, only a parent, grandparent, legal guardian or a court could establish an SNT for the disabled individual. For those without parents, grandparents or legal guardians, the only way to establish an SNT was to go through the court, a process that takes time and thousands of dollars. Perhaps even more upsetting, the old law presupposes that all individuals with disabilities were not legally competent to manage their own affairs.
The Special Needs Trust Fairness Act simply adds the disabled individual to the class of people who can establish a First-Party Special Needs Trust, thereby making it easier (and in some cases cheaper) for competent adult individuals with disabilities to be involved in the management of their affairs and maintain their eligibility for governmental benefits programs that provide crucial care and support.
Special Needs Trusts are highly technical documents that should only be established by a specialized, qualified practitioner. To learn more about how a Special Needs Trust could benefit you or your loved one, contact our office.