Individuals with disabilities now have the right to create their own self-settled special needs trust (SNT) without having to go to court, thanks to the President’s signing of the 21st Century Cures Act into law on December 13, 2016.
Section 5007 of the 21st Century Cures Act includes language from the Special Needs Trust Fairness Act of 2015, adding the words “the individual” to the existing statute. Prior to this change, disabled individuals without a living parent or grandparent could not create a self-settled SNT without having to go to court.
The effective date of the amendment to the Special Needs Trust Fairness Act of 2015 applies to trusts established on or after December 13, 2016.
A self-settled SNT differs from special needs trusts created by third parties for the benefit of a special needs individual. Special needs trusts are funded with the third party’s assets or other sources and are a common estate planning tool to improve the qualify of life for a disabled individual. Upon the death of the disabled individual, the remaining assets in a third-party trust can pass to other family members.
Self-settled SNTs must include a provision that, upon the death of the disabled individual, the state’s Medicaid agency will be reimbursed for the cost of any benefits received by the individual. Payments from the SNT to the disabled individual may be limited depending on state law and could require an annual accounting to the state Medicaid agency. There are also rules that must be strictly adhered to so that the disabled individual is not disqualified from receiving Medicaid or SSI (Supplemental Security Income) benefits.
If you are considering a special needs trust, you should consult with an experienced special needs estate planning attorney to determine which trust vehicle works best for your needs.
If you’d like to learn more about how we can help you with your estate planning, please contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.