On December 13, 2016, President Obama signed the Special Needs Trust Fairness Act into federal law, as part of the 21st Century Cures Act. An article from The Ledger, “Special-Needs Trusts for Disabled Individuals Now Easier,” goes into detail about the new benefits for special needs individuals provided by this new law.
The law adjusts previous legislation concerning first-party special needs trusts, which enable those with disabilities to remain eligible for means-based government funding, even if they have assets that could disqualify them. The trust is funded with the person’s assets, but does come with restrictions on how the money can be spent. For example, funds may not be used to purchase food or make any kind of housing payments, including utilities.
Before the passage of the Act and this change, the law “requir[ed] individuals with disabilities to use a parent, grandparent, guardian or court of competent jurisdiction to create a first-party special needs trust”. This meant even if a special needs person was competent, they were not allowed to establish their first-party special needs trust on their own.
Special needs trusts were established so special needs individuals were not penalized for having assets. Now after the passing of the Act, first-party trusts are more accessible and give more independence. Being able to preserve assets in these trusts affords disabled individuals the ability to utilize their assets without missing out on crucial government assistance that improves their quality of life.
Parents of special needs children should seek an experienced estate planning and special needs attorney to help you and your child determine the best special needs trust options. Establish this relationship early so your child will be able to trust and rely on these professionals. They can then help your child manage their trust in the future.
For more information on this and other special needs topics, explore our website and contact us to schedule your consultation today!
Reference: The Ledger (February 2017) “Special-Needs Trusts for Disabled Individuals Now Easier”