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| Milestone Consulting, LLC

On December 13, 2016, only one month before leaving office, President Obama signed the 21st Century Cures Act into law. The sprawling healthcare bill addressed numerous issues, from the epidemic of opiod addiction to informed consent requirements in clinical research. But hidden pages below the new law’s provisions on accelerating cancer research and empowering young scientists is a brief section that could have a major impact on the lives of thousands of people with special needs.

The Special Needs Trust Fairness Act

Section 5007 of the 21st Century Cures Act revises our nation’s Social Security law by adding two words, “the individual,” to the list of people who are allowed to establish special needs trusts. With this change, federal law has now expanded the scope of special needs trusts that are exempt from benefit eligibility evaluations to include first-party trusts, funds established by people with special needs.


Sunrise On Prairie and River

Before the change, special needs trusts could only be created for people with disabilities. As a result, the participation of parents, grandparents, legal guardians or a Court was required to set up a trust. This requirement was unnecessarily burdensome on many individuals with disabilities, especially those who did not have a living parent or grandparent. These people were obligated to expend significant time and money to seeking Court approval, which was an onerous necessity for two decades.

Empowering People With Special Needs To Control Their Financial Futures

With a stroke of President Obama’s pen, all that has changed. Effective December 31, 2016, mentally competent adults with disabilities are allowed to set up and fund their own first-party special needs trusts. Finally, after nearly two decades of legislative error, people with special needs who are capable of making their own financial decisions will actually be able to do so.

Establishing a special needs trust provides invaluable financial protection for many people with disabilities. The money placed in a special needs trust isn’t counted towards the beneficiary’s personal assets, which allows people with special needs to continue receiving necessary government benefits like Medicaid and Supplement Security Income. At the same time, the trust’s assets can be used to enhance the beneficiary’s quality of life, as long as none of the money is used to purchase items that overlap with what means-tested public assistance programs cover. The trust itself is administered by a trustee, often a reliable family member or financial professional who manages the trust’s assets and purchases items and services in the beneficiary’s best interests.

As the Special Needs Alliance notes, this necessary change is actually the second legal measure in the same number of years to expand the financial choices available to people with disabilities. In 2015, Congress approved a new financial vehicle, the 529 ABLE account, that allows families of children with special needs and certain individuals with disabilities to create tax-advantaged savings account without losing their government benefits.



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