With the simple addition of two words, the Special Needs Trust Fairness Act (the “Act”) empowers mentally competent individuals with disabilities to establish a special needs trust on their own behalf. Effective December 13, 2016, the Act corrects a legislative drafting error that previously made it necessary for such individuals to rely on either their loved ones or a court to advocate on their behalf.
It may seem odd to enact legislation to insert the two words “the individual” in a Section of the Social Security Act, but these two words are game changers in that they now allow individuals under the age of 65 who fit within the legal definition of disability to set aside assets to provide for their supplemental care or non-medical needs without disqualifying them from Medicaid. Everyday expenses classified as non-medical needs may include items such as clothing, furniture, and computers.
Previously, the only way to establish a special needs trust was to have a parent, grandparent, legal guardian, or court set one up for them, which normally takes additional time and is more costly. If a disabled person desired to establish a self-settled special needs trust, they would have had to file a petition with a court, extending the process by several months. In some states, it was first necessary to establish a “voluntary” guardianship to sign a special needs trust petition and then immediately dismiss the guardianship once the trust was signed.
Based on these lengthy procedures, the Act’s enabling disabled individuals to establish special needs trusts on their own behalf can save both time and money.