Special Needs Trust Fairness Act Allows Disabled Individuals To Establish Their Own Special Needs Trust

August 28, 2017 | Andrew Foster

On December 7, 2016, the Senate approved H.R. 34, which includes the Special Needs Trust Fairness Act.  This act adds provisions to the law allowing competent individuals with disabilities to create their own special needs trusts.

Under means-tested benefit programs like Medicaid and Supplemental Security Income (SSI), disabled individuals can only qualify for benefits if they have no more than $2,000 in countable assets. Special needs trusts allow disabled beneficiaries to receive the benefit of trust assets without disqualifying those beneficiaries from receiving means-tested benefits. With a properly drafted special needs trust, trust assets can be used to pay for expenses that are not covered by means-tested governmental benefit programs without displacing the governmental benefits that the beneficiary would otherwise be eligible to receive.

Prior to the enactment of H.R. 34, a disabled individual could not establish their own special needs trust.  Therefore, even if a disabled individual’s own assets were used to fund a special needs trust, the trust would nevertheless have to be established by a parent, grandparent, guardian or court.  The Special Needs Trust Fairness Act simply adds the phrase “by the individual” to the list of those permitted to establish a special needs trust. 

Once President Obama signs H.R. 34 into law, disabled beneficiaries with mental capacity to establish their own trust no longer need to seek the assistance of their parents, grandparents, guardians, or the court. They may now act on their own behalf to establish a first-party special needs trust and fund it with their own assets, without any undue legal difficulties.

If you have any questions regarding the Special Needs Trust Fairness Act or any other issue, please contact Cecil S. Harvell or Andrew G. Foster at Harvell and Collins, P.A.      

Andrew G. Foster
About the Author
Andrew G. Foster is a native of Fayetteville, North Carolina and was admitted to the North Carolina State Bar, 2010. Mr. Foster also holds and LL.M. in Taxation and as such was licensed to practice before the United States Tax Court in 2012. Read More
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