Estate PlanninG

Special Needs Trust Fairness, At Last

December 13, 2016 marked the end of a 23 year-long period where mentally fit individuals where barred from establishing their own special needs trusts. The Special Needs Trust Fairness Act, part of the broader 21st Century Cures Act, was signed into law by President Obama and rectified what was considered an unintentional omission in the Omnibus Budget Reconciliation Act of 1993. That law allowed for the creation of special needs trusts (SNTs), however, didn’t provide a way for individuals with special needs to set up their own trusts. Consequently, individuals who wished to set up a SNT for themselves were forced to seek aid from others or pay and wait for court approval if they had no living parents or grandparents.

SNTs are crucial for anyone with special needs who is expecting to receive assets in the form of an inheritance. This usually benign transfer of wealth is problematic because it can disqualify a disabled person from receiving governmental assistance. Because the disabled individual’s assets have increased, the government may determine that they no longer need government aid, which they consider to be basic care. To avoid this issue, SNTs are a useful tool to consider when also constructing your will. Because the trustee has control over the funds or assets, the beneficiary won’t be penalized by loss of benefits/aid.

If you qualify and receive Supplemental Security Income (SSI), Medicaid, vocational rehabilitation, and subsidized housing, etc., it’s important to discuss SNTs with your loved ones to ensure their generosity doesn’t end up hurting you. Additionally, if you intend to leave anything to your loved ones with disabilities, speak with them and determine what kind, if any, assistance they are receiving. If you have any further questions about SNTs or would like to establish one, please feel free to reach out to the law offices of Santaella Legal Group, APC, we provide legal services in San Ramon, Danville, Dublin, Pleasanton & the entire Bay Area.