A special needs trust holds assets (usually funds) for the benefit of a disabled person without affecting any public benefits the person may receive, such as SSI or Medicaid. Those assets can then be used for the disabled person’s benefit.
Current law allows a disabled person to create a special needs trust, with his or her own funds (a “self settled” trust). However, the law restricts those who can establish such a trust to a “parent, grandparent, legal guardian of the individual, or a court.” (See 42 U.S.C. 1396p(d)(4)(a).)
Oddly, the disabled person has no power to establish a self settled special needs trust. As a result, a disabled person — even one with full mental capacity — must petition a court to create such a trust when there is no parent, grandparent, or legal guardian.
The Special Needs Trust Fairness Act introduced into this session of the U.S. Congress (H.R. 670) would remedy that gap in the law by allowing a disabled person to establish a self settled special needs trust on the person’s own behalf.
The bill enjoys bipartisan support. A version of this bill in the last Congress passed out of the Senate Finance Committee but failed to become law.
We at Sykes Elder Law support the Special Needs Trust Fairness Act. Current law burdens disabled persons unnecessarily by requiring them to file court petitions to establish their own trusts, simply because they have no parent, grandparent, or legal guardian to do that for them. This distinction is unfair, benefits no one, and causes unnecessary work for the court system.
We urge all those who care about the disabled in our country to support the bill and to make your support known to your senators and representatives in Congress.