Two Small Words Bring Meaningful Change for Special Needs Trusts

By Marty Ford

The enactment of the 21st Century Cures Act (P.L. 114-255) on December 13 brought with it a very short but meaningful provision for people with disabilities. By adding only two words (”the individual”) to an existing statute, section 5007, the Fairness in Medicaid Supplemental Needs Trusts, will allow individuals who have disabilities to set up their own self-settled trusts for purposes of the Medicaid program.   This technical fix was long needed to address a technical legislative drafting error in a 1993 federal law which was later interpreted to have Congressional intent.

Self-settled special needs trusts are an important planning tool for many individuals with disabilities who receive certain government benefits, such as Medicaid and Supplemental Security Income (SSI), and who receive funds from other sources, such as an inheritance or personal injury lawsuit. Without such a trust, these individuals would lose their government benefits that are essential for basic living and medical expenses. Prior to enactment of this new law, individuals with disabilities who didn’t have a living parent or grandparent couldn’t create their own self-settled special needs trust without going to court. This new law moves us forward in addressing the needs of many people with disabilities who can and should be able to handle their financial affairs without the need for court intervention or other obstacles that stand in the way.