Special Needs Trust Fairness Act Signed Into Law
On December 7th, the Senate passed H.R. 34, the 21st Century Cures Act and President Obama signed it into law on December 13th. The package included the Special Needs Trust Fairness Act which corrects an error in the law that presumes that all persons with disabilities lack the mental capacity to handle their own affairs. The law takes effect immediately.
Special needs trusts where the assets initially belonged to the disabled beneficiary, commonly called d4A trusts, were first recognized by Congress in 1993. They allow individuals with disabilities to use their savings to provide for their supplemental needs while still qualifying for Supplemental Security Income (SSI) and long-term services and supports from means-tested programs like Medicaid. The law as written in 1993 stated that a d4A trust could only be created by a parent, grandparent, legal guardian or a court. Mistakenly left out when the law was created was the ability of the disabled individual to create the trust.
That oversight in the 1993 trust law meant that disabled had to look to another for the creation of the trust which could often be demeaning. Also, disabled individuals, who otherwise had capacity but who did not have a parent, grandparent, or legal guardian, had to petition a local court for the creation of their trust. This in turn led to unnecessary legal fees, time wasted, and administrative confusion. The Special Needs Trust Fairness Act corrects this error by allowing disabled individuals with capacity to set up their own trust. “No longer will individuals in need of a special needs trust, but without parents or grandparents, face undue legal difficulties,” said National Academy of Elder Law Attorneys President Catherine Anne Seal, CELA, CAP.
The firm’s elder law attorney, Elizabeth Allen, can assist you with any issues or questions you have about special needs trusts.