Last year’s passage of the Special Needs Trust Fairness Act ushered in significant legislative changes to the establishment of Special Needs Trusts (SNTs).
SNTs have the potential to greatly improve the lives of individuals living with disabilities, because the assets held in these types of trusts are non-countable, thus providing a person with disabilities access to additional financial support while remaining eligible for benefits such as Supplemental Security Income and Medicaid. Prior to December 2016, federal statute only allowed SNTs to be established by a third party, leaving even those with the mental capacity to make financial decisions for themselves reliant on a parent, guardian, or relative, and in some cases forcing them to undergo the lengthy and often expensive route of petitioning the court on their own behalf. The Special Needs Trust Fairness Act (passed this past December as part of the larger 21st Century Cures Act) has finally amended this issue.
Under the new law, disabled individuals now have the ability to set up SNTs for themselves, using their own assets. It should be noted that these SNTs differ from Third Party SNTs which are funded with the assets of family members or other sources and not with the individual with disability’s own assets. Third party SNTs are a common estate-planning tool used to improve the quality of life of the individual with disabilities. Unlike first party SNTs, assets held by third party SNTs, do not have to be used to repay the Medicaid program for the cost of care provided to the individual with disabilities. Instead, the assets can pass to other family members on death of the individual with disabilities.
If you feel you or someone in your care might benefit from establishing a Special Needs Trust please reach out to us! RLG understands that this can be confusing. We’re here to answer any questions you may have and guide you through the process.
Marianne Cirillo is one of the attorneys at Rucci Law Group, LLC. She practices primarily in the areas of trusts and estates and real estate. Marianne can be reached at 203-202-9686 or at email@example.com.