Potential Changes for Special Needs Trusts

Special needs trusts are excellent tools that help protect an individual’s assets while preserving his or her eligibility for government benefits, such as Medicaid. There are different types of special needs trusts and how they are established may be affected by the Special Needs Trust Fairness Act of 2013(H.R. 2123).

The proposed changes are currently being considered by Congress. The main amendment of the Act sets forth to provide additional freedom to the disabled individual. Current law requires that a disabled and capacitated individual must have their parent or guardian create the special needs trust. For those who have special needs, but do not have capable family members to rely on, this can create added challenges since court action is necessary. This requirement usually entails added legal fees and delays. The Act is being proposed to remove these requirements and allow the disabled individual to directly establish a special needs trust themselves, as long as they have the legal capacity to do so.

In these first-party special needs trusts, the individual will be able to benefit from his or her assets while still receiving Medicaid, Social Security, or other government benefits. The added financial freedom and independence will help individuals manage their lives and care for themselves. Money from special needs trusts can be used to help with some day-to-day living expenses, but there are restrictions on what expenses are allowable.

Special needs planning in North Carolina is best handled with the assistance of a special needs trust attorney. There are important considerations that must be made when transferring assets into structuring a special needs trust and a lawyer can advise you how best to manage these steps.