April 24th, 2017

Special Needs Trust Fairness Act Allows for Self-Funded Trusts

On December 13, 2016, President Obama signed into law the 21st Century Cures Act, an omnibus health bill (“Cures Act”) which contained a provision amending 42 U.S.C. § 1396p(d)(4)(A) relating to Special Needs Trusts (“SNT”) to allow individuals with disabilities to establish their own self-funded, individual special needs trusts.

Prior to the Cures Act, individual special needs trusts could be “established for the benefit of the disabled individual by a parent, grandparent, legal guardian of the individual, or a court” but omitted individuals with disabilities who by definition were unable to create their own self-settled SNT directly.

Since 1993, when special needs trusts first were created, (d)(4)(A) SNTs which were found to be self-settled by the individual with disabilities were held not to meet the requirements applicable to special needs trusts, and therefore were considered countable resources when applying for public benefits such as Social Security Income or Medicaid Assistance.

The Cures Act remedies this long-standing issue by amending 1396(d)(4)(a) so that SNTs can now be established by a disabled individual, a parent, grandparent, legal guardian, or a court. This new definition applies to trusts established on or after December 13, 2016, the day the Act was signed into law.

If you have questions about this new law or any questions about estate planning, estate planning documents such as a Will, Power of Attorney, or Living Will, or questions about probate and estate administration, do not hesitate to contact us.

Attorney Thomas A. Capehart is an elder law and estate planning attorney assisting families throughout the Lehigh Valley with important documents to preserve their health and financial future.