For those with disabled family members, President Obama signed the Special Needs Trust Fairness Act last month. Previously, if a person was under the age of 65, disabled, and came into substantial assets (a common example is a personal injury settlement, but could also include an inheritance or gift) that would otherwise disqualify them for SSI (supplemental income payments, commonly referred to as “welfare”), Medicaid, or other important means-tested government benefits, a special needs trust could be established to prevent them from losing those benefits…but only upon court authority, typically through a conservatorship. This is often undesirable when the disabled beneficiary has mental capacity and is only physically disabled. Conservatorships can take several months to establish, and may cost thousands of dollars in attorney’s fees and costs. Further, the reporting requirements can be onerous for a lay person – such as a family member – to manage.
The Special Needs Trust Fairness Act allows disabled individuals under the age of 65 who are NOT mentally incapacitated to set up their own trusts – without the need of a guardianship, conservatorship, or court oversight. The trust should still be reviewed and approved by the state Medicaid authority (in Missouri, HealthNet). Once approved, the trust may be implemented and may only need to be registered with a court, which requires minimal paperwork and expense compared to prior onerous court oversight.