Special Needs Trust Fairness Act of 2015

Thursday, September 30th, 2105

Hello everyone, and welcome back to the blog this week! We hope that you all had a chance to read last week’s update on M&L’s non-profit, Integrated Living Opportunities. Just as a reminder, we are still recruiting families to take part in the New Futures Initiative™ training session that will take place in February of 2016. If you would like to learn more or are interested in going, please let us know!

Today, we would like to talk about a topic that is near and dear to our hearts: the special needs trust (SNT). As special needs financial planning experts, we consider that SNT one of the most valuable financial planning strategies for individuals with disabilities. As such, we have written about this topic and how the SNT can benefit individuals with disabilities many times in our blog – in fact, just a couple of weeks ago we published a post titled Saving for the Future of Your Family with Special Needs: The ABLE Account and The Special Needs Trust. If you would like to visit our Special Needs Trusts blog archive, please click here.

Today, we would like to shift gears a little bit – we are going to talk about SNTs, but instead of discussing how they work, we are instead going to focus on a new bill that proposes to improve access to SNTs for individuals with disabilities all across the country – please read on to learn more!

The Special Needs Trust

As mentioned, we have written about the special needs trust (SNT) many times in this blog. In case you are new to our website, however, here is a brief description:

A Special Needs Trust is a legal document that is designed solely for the financial protection of an individual with a disability, established by placing funds and other assets under the control of a trustee. It is one of two legal ways for a beneficiary (the individual with a disability) to receive the benefit of unlimited extra income without sacrificing valuable state and federal benefits (the second being the newly approved ABLE accounts).

It is important to note that a special needs trust only works if it is written correctly; a trust which has been established without regard for the eligibility laws may disqualify a person with disabilities from government benefits, specifically from Supplemental Security Income (SSI) and Medicaid. When creating special needs trusts, it is important to always consult professionals experienced with working with families with special needs.

If you would like to learn more about special needs trusts and how they can benefit individuals with disabilities, please click here.

The Special Needs Trust Fairness Act of 2015

Now that we are all familiar with the SNT, it is time to take a look at this new bill, The Special Needs Trust Fairness Act of 2015. The bill, recently proposed by Congressman (GT) Glenn Thompson and Congressman Frank Pallone Jr., was created to provide individuals with more options when it comes to saving for the future, and establishing special needs trusts. The bill aims to achieve this goal by making it legally possible for individuals with disabilities to create their own first party special needs trusts.

In order to understand how important this bill could be, it is important to fully understand how special needs trusts work. As described above, a SNT is established by placing assets under the control of a trustee. This can happen one of three ways: (1) either the assets are owned by another person that establishes the trust, with the person with disability names as a beneficiary (third party/supplemental trust), or (2) the assets are owned by the person with disability, and a trust is established by a parent, grandparent, guardian or the court (first party/pay back), or (3) the assets of two or more individuals with disabilities are pooled together, held and administrated by a non-profit (pooled trust). In each of these cases, (and as the law is currently written) someone other than the individual with a disability – parent, grandparent, guardian, or the court – has to create and act as a trustee for the trust.

Congressmen Pallone’s and Congressman Thompson’s bill would fix this oversight by making a “technical correction to Section 1917(d)(4)(A) of the Social Security Act regarding special needs and pooled trusts under Medicaid, which are exempt from asset counting and transfer rules, to allow non-elderly individuals with disabilities to establish a special needs trust on their own behalf.[i]” In other words, the language of the trust would be changed to give individuals the same rights as parent, grandparent, guardian, or court.

According to Congressman Pallone, “The barriers that currently prohibit an individual from creating a Special Needs Trust, despite having the mental capacity to do so, have no basis in reality and place an undue burden on disabled individuals who are simply trying to make ends meet.” If you agree, and would like to express your support for this bill please visit Congressman Thompson ‘s website.

Would You Like More Information?

Thank you all so much for taking the time to drop by our blog today! We hope that you learned something new about the special needs trust, and how it can positively impact the financial future of individuals with special needs. If you are interested in learning more about this new bill, please click here to read Congressman Pallone’s press release on the new bill, or contact us to learn more. You may also wish to visit our Special Needs Trust blog archive, where we have written many, many posts on the topic.

Please join us again next week for a discussion of the One Social Security Act – have a great Thursday!

[i] http://www.finance.senate.gov/imo/media/doc/S%20349%20Mark.pdf

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