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Special Needs Trust Fairness Act

Posted by Paul D. Woodard | Jan 25, 2017 | 0 Comments

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Unfortunately, many people underestimate the abilities of those individuals with mental or physical disabilities. In reality, many people with disabilities are able to handle many of their own affairs and achieve a high level of independence in spite of their mental or physical disabilities. Historically, the law maintained these misconceptions about the disabled, presuming the disabled lacked the mental capacity to plan for their futures. However, times are changing and a new law allows individuals with disabilities to create their own special needs trust independently.

On December 13, 2016, President Obama signed the Special Needs Trust Fairness Act into law, as one of a number of laws comprising the 21st Century Cures Act. The law went into effect immediately and has come at long last to a number of individuals with disabilities and disability advocates.

Before the Special Needs Trust Fairness Act went into effect, a special needs trust to take care of the needs of a disabled person had to be established by a parent, legal guardian, grandparent, or by the courts. Even if the disabled individual had the mental capacity to create a special needs trust for themselves, they were forced to undergo the costs and delays of getting a qualified person to establish the trust on their behalf.

In some cases, when a disabled individual sought out legal help to establish a trust, without a parent or legal guardian to establish the trust, the court could intervene and place the trust under court supervision. As a result, the disabled individual's trust would have to be overseen by a court-appointed supervisor even if the individual had the full mental capacity to handle their own finances. This meant the disabled individual's funds could be potentially diverted to pay for court fees and bonds rather than be used to take care of their personal needs.

Individuals lacking legal capacity to enter into a trust may still require a parent or legal guardian to establish a special needs trust, or have the court establish a trust for their benefit. However, for the thousands of able-minded individuals with disabilities, the new law will allow them to establish a special needs trust more quickly and without the additional expenses that come with court intervention.

Special needs trusts can be essential to many disabled people and their families. A qualified trust can allow them to receive government benefits, including Medicaid, Supplemental Security Income, and other benefits, while receiving additional assistance from a trust. However, without a special needs trust in place, many individuals could become disqualified from receiving government assistance or be forced to rely on government assistance alone.

The Act was originally introduced in the Senate by Senator Chuck Grassley of Iowa. The amendment required a simple amendment to allow special needs trusts to be established by “the individual” and “for the benefit of such individual.”

Butterfield Schechter LLP assists clients in establishing trusts and estates. Our firm can help you and your family make estate plans, take advantage of tax-savings opportunities, avoid penalties, and plan for your family's future. Contact our office today with any questions on how we can help you and your family succeed.

About the Author

Paul D. Woodard

Paul Woodard practices in the areas of Employee Benefits, Employee Stock Ownership Plans, Pension and Profit Sharing Plans, ERISA, ERISA Litigation, Business Law, Qualified Domestic Relations Orders (QDROs), and Estate Planning.


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