Texas Estate Planning

People with Special Needs Get Big Victory

Many people with special needs rely on government benefits for their day-to-day care. Without those benefits, they could not survive for long. However, having access to property and other assets can make one ineligible for many government benefits, which at one time meant that people with special needs had to be paupers and not own property.

To address that problem, special needs trusts were created.

A parent, grandparent, guardian or a court could create a trust for the person with special needs. If done properly, that would not make them ineligible for government benefits. However, people with special needs were not allowed to create the trusts for themselves. The law assumed that everyone with special needs lacked the mental capacity to create a trust.

This was the subject of a recent article in the Wills, Trusts & Estates Prof Blog titled "The Special Needs Trust Fairness Act Has Passed."

Both the House and the Senate voted to pass the Special Needs Fairness Act, which gives the ability for people with special needs to create their own trusts for themselves. On Dec. 13, 2016, President Obama signed this into law when he signed a larger piece of health care legislation.

Special needs trusts still need to be set up carefully, so people with special needs should seek expert assistance to set up their own.

Reference: Wills, Trusts & Estates Prof Blog (Dec. 7, 2016) "The Special Needs Trust Fairness Act Has Passed."

Special Needs Attorney Testifies Before Congress

Richard Courtney told the Subcommittee members that the legislation that originally created Special Needs Trusts (SNTs), the Omnibus Budget Reconciliation Act of 1993, "included a drafting oversight that seems to assume that a person with disabilities lacks the requisite mental capacity to enter into a contract… We believe it was … not the intent of Congress to deny a basic right to individuals with disabilities."

In its report on the testimony, The (Jackson, MS) Clarion-Ledger's "Courtney testifies before Congress on behalf of persons with disabilities," said that, at present, special needs trusts funded with assets of an individual with disabilities must be created for that individual by his or her parent, grandparent, legal guardian or a court. Because of this requirement, adults with no living parents or grandparents and no guardian are forced to petition the court to create a special needs trust.

Courtney based his remarks on both his professional experience as a special needs and elder law attorney, as well as his experience as the father of a daughter with cerebral palsy and learning disabilities. Speaking of daughter Melanie, he noted that she needs and is receiving attendant care under a Medicaid waiver program. Because the cost of her care and services is expensive, she must rely on programs such as Medicaid, as do many persons with disabilities.

Right now the law says that she can't create her own trust if she were to receive an inheritance or settlement—so she could forfeit her Medicaid waiver benefits that pay her attendant to her each day for a few hours. 

An SNT would allow Melanie to pay for additional health care that's not covered by Medicaid, in addition to basics like clothing, transportation, and furniture.

Talk with an elder law and special needs attorney if you have questions about SNTs.

Reference: The (Jackson, MS) Clarion-Ledger (October 18, 2015) "Courtney testifies before Congress on behalf of persons with disabilities"