What does the Special Needs Trust Fairness Act do for Pennsylvania families?

On December 13, 2016, the Special Needs Trust Fairness Act was enacted to allow individuals with disabilities who are mentally capable to establish self-settled special needs trusts (SNTs) to hold their own funds. Before this change in legislation, only a court or the parent, grandparent or guardian of a mentally capable person could establish this type of trust.

Self-settled SNTs benefit trust beneficiaries with disabilities by allowing them to retain supplemental resources while still qualifying for important public benefit programs like Supplemental Security Income (SSI) and Medicaid. Without an SNT, disabled individuals risk losing Medicaid or other public benefits if they receive an inheritance, a personal injury award or other financial assistance. For many individuals with disabilities, the ability to retain resources to supplement public benefits is critical to provide for their essential needs.

When President Obama signed the Twenty-First Century Cures Act on December 13, 2016, mentally capable individuals were given the long overdue ability to establish their SNTs for themselves through a slight change in phrasing of the original legislation. The “Fairness in Medicaid Supplemental Needs Trusts” section of the law corrects an error made 23 years ago by adding the words “the individual,” thereby extending the rights to individuals to establish SNTs.

The legislation is a welcome change for individuals with disabilities and their families. The oversight in the 1993 legislation caused undue hardship for disabled people without parents, grandparents or guardians by requiring them to spend much time and money to establish SNTs through the courts or a guardianship proceeding. The wording of the law was an injustice for disabled people and required them to depend on others to establish SNTs.

The Special Needs Trust Fairness Act recognizes that many individuals with disabilities are able to make their own decisions about the need for SNT planning, and it removes a barrier for the creation of these trusts. SNTs are an important planning tool for individuals with disabilities. With this new legislation, they now have greater control and fewer restrictions when planning their finances.