After many years of advocacy by the National Academy of Elder Law Attorneys and other advocacy groups for persons with disabilities, such as the Special Needs Alliance, the Special Needs Fairness Act of 2015, S. 349, was signed by President Obama on December 13, 2016. The Act allows persons with disabilities to create their own special needs trusts under 42 USCA 1391p(d)(4)(a) if they have the capacity to do so. The pending legislation was previously discussed in this blog.
The Special Needs Fairness Act addresses a problem for many persons with disabilities. Special needs trusts allow a person with a disability to set aside assets to supplement daily living expenses and provide additional care when government benefits are not sufficient. Prior to the enactment, such trusts could only be settled by a parent, grandparent, guardian, or the court, even when the person was not legally incapacitated. When there was no family member or guardian to act as settlor, filing a petition to have the court act as settlor was a purposeless formality that added considerable expense to the process and burdened overworked courts unnecessarily.
It is significant that no court action was necessary when a parent or grandparent acted as settlor of the Special Needs Trust. Requiring a court to establish the trust solely due to the unavailability of a parent or grandparent was an unfair restriction for a person with a disability in the exercise of his or her rights. The Special Needs Alliance supported the legislation, stating, in part, as follows:
Often, our members are called upon to assist persons with disabilities in creating special needs trusts, as provided in 42 U.S.C. §1396p(d)(4)(A). Unfortunately, this section does not permit a capable person with special needs to create his or her own trust, limiting the class of trustors to the person’s parents, grandparents, a guardian or the Court. Since adults often outlive their parents and grandparents, many persons with disabilities have no alternative but to expend unnecessary time and money to go to a Court to ask a judge to create the trust for them. This restriction fails to recognize that persons with disabilities should have rights equal to nondisabled citizens where possible, and it continues the traditional denigration of persons with disabilities.
The Act should have been a slam dunk. It relieves persons with disabilities of a major expense. The initial court action to establish a special needs trust typically costs $2,500 or more in legal fees and court costs. After the trust is established, many courts require annual accounts to be filed, costing another $1,500 to $2,500 per year. This was a prohibitive expense because special needs trusts are often created to preserve small amounts. Although benefitting many deserving persons, none of whom would be undocumented aliens, the Act costs the government nothing. That such a logical, fair, nondiscriminatory, beneficial law made it out of Congress provides a tiny glimmer of hope for more sanity in government.
John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
©2017 John B. Payne, Attorney