Senate approves special needs trusts legislation

Senate Passes Trust Fund Bill
Senate Passes Trust Fund Bill

The U.S. Senate passed a bill September 9 amending the Social Security Act to allow people with disabilities to set up their own special needs trusts.

Under current law, only parents, grandparents and guardians can set up special needs trusts and certain pooled trusts, although some people with disabilities can via court permission. This rule stands even where the individual is mentally competent to create his or her own trust.

Contrary to many other trusts, assets in supplemental needs trusts, better known as special needs trusts, are not counted when determining an individual’s eligibility for Medicaid, Supplemental Security Income, and means-tested programs.

“Those who want and need to set up a trust to help pay for their care shouldn’t have to jump through hoops to do it,” said Sen. Chuck Grassley (R-IA), who sponsored the bill with Sen. Bill Nelson (D-FL) and Sen. Debbie Stabenow (D-MI), in a news release. “This bill allows individuals to act in their own interests with their own assets without having to rely on a family member or the courts.”

The Special Needs Trust Fairness Act, introduced in February, passed the Senate unanimously.

A companion bill, also introduced in February, is pending in the U.S. House of Representatives’ Subcommittee on Health. According to the National Academy of Elder Law Attorneys, similar legislation was previously introduced in 2013 and 2014.

“This is a common-sense, bipartisan fix that goes a long way for the individuals affected,” NAELA President Shirley B. Whitnack said in a news release [PDF]. “I look forward to working with the House to get this to the President’s desk.”