The U.S. Senate and House have now passed the Special Needs Fairness Act, and it is expected to be signed by President Obama in the near future. The Act makes an important change to the law relating to self-settled special needs trusts (aka Medicaid Pay-Back Trusts; aka D4A Trusts), and in doing so advances the dignity of adults with disabilities.
These trusts have long been used to protect the assets of persons with disabilities and under age 65, and
who apply for Medicaid and/or Supplemental Security Income. However, the law has been that these trusts must be created by a court, a guardian/conservator, or the parent or grandparent of the disabled trust beneficiary. After this new Act becomes law, in addition to these existing methods, persons with disabilities and who are competent will be able to create their own trusts.
“Many people who use these trusts and apply for government benefits are perfectly capable of directing their own affairs” explains Attorney Amy Tripp. “Unfortunately the law has always been based on the assumption that persons with disabilities lack the mental faculties to make their own choices. With this change this bias is eliminated. Those of us who practice in this area are thrilled to have this problem finally fixed. In addition to making the creation of these trusts less complicated, this new law will allow those competent persons with disabilities who create these trusts to have their trusts managed without continued oversight and intervention of courts and others. We applaud congress on this important and long sought development in the special needs world.”
Expect more commentary from us on what this means in the coming weeks.