On December 7, 2016, the U.S. Senate passed the Special Needs Trust Fairness Act. President Obama reportedly intends to sign it. This Act makes it possible for a disabled adult who is mentally competent to establish his or her own special needs trust if they acquire assets that will put them over the asset limit for programs such as Medicaid or SSI. It corrects the false presumption in prior law that all disabled persons lack the mental capacity to handle their own legal and financial affairs.

Under prior law, only a parent, grandparent, court appointed guardian or a court itself could establish the type of special needs trust that allows a disabled individual to benefit from their assets for their supplemental needs while maintaining eligibility for Medicaid and SSI (also known as a (d)(4)(A) trust, after the enabling legislation). The Social Security Administration would sometimes even deny trusts established by a court if the disabled individual was the one who petitioned the court for an order to establish with the trust, with the outrageous position that the court was acting as the mere agent for the disabled individual. The new legislation will halt that practice.

By doing away with the need for a court order, the new legislation will can save a competent adult disabled beneficiary thousands of dollar sin legal fees and lost benefits, as well as the time and indignity of having to involve the court in his or her financial affairs. If you would like further information on special needs trusts and how to establish them, please contact us.