U.S. Senate passes the Special Needs Fairness Act!
Howard Atlas | September 15, 2015
As Special Needs Attorneys, we often utilize a useful planning tool called a first-party Supplemental Needs Trust (“SNT”). A first-party SNT is funded with the assets of an individual with special needs. The Trust can then provide that individual with services and items that are not covered under any government benefits that he/she might be receiving. The SNT essentially allows individuals with special needs to qualify for their government benefits, while preserving their excess resources for their lifetime benefit. The catch with using an SNT is that any assets remaining in the Trust upon the individual’s death, must first be repaid to the government for the services that they provided to the individual during his/her lifetime.
In order to create an SNT a parent, grandparent, court or guardian must establish this trust for the individual with special needs. There is a false assumption within this rule that an individual with special needs is mentally incompetent—which is not always the case. As such, for the past 22 years, this has created an issue for those individuals who are disabled, but who are not cognitively impaired. The blind, deaf, wounded Veterans, paraplegics and quadriplegics are a few examples of those who are affected by this rule since they are unable to create and fund an SNT on their own—they must petition the court in order to create a SNT.
With court-ordered SNTs the court provides oversight on how they money is spent, and often, for large purchases, requires court permission before a purchase is made, therefore, restricting how an individual can utilize their own funds for their own needs.
However, there is hope for these individuals. Last week the U.S. Senate passed a bill called the Special Needs Fairness Act that will allow competent individuals with special needs to create a SNT for themselves—removing the requirement of a third party. If the U.S. House of Representatives also passes this bill, then the Special Needs Fairness Act will allow for competent individuals with special needs the autonomy to plan for their own futures.
We recommend that you contact your House Representative to urge his/her support for this important piece of legislation.