On December 13, 2016 President Obama signed the “Special Needs Trust Fairness Act” into law. This law makes a simple amendment to 42 U.S.C. 1396p(d)(4)(A)adding the phrase “the individual” so that it now reads.
(A) A trust containing the assets of an individual under age 65 who is disabled (as defined in section 1382c(a)(3) of this title) and which is established for the benefit of such individual by the individual, a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter.
This simple change now allows physically disabled but mentally competent people to establish their own Special Needs Trusts. Previously this could only be done if their parent or grandparent did it, or if they were incompetent their guardian could, or perhaps via a court order.
The net is that more disabled people can benefit from the Special Needs Trust’s ability to shelter assets from the draconian limits imposed by SSI and Medicaid. With the usual caveat that upon their death all assets in the Special Needs Trust revert to Medicaid, or at least enough to repay Medicaid for all of its expenditures for the beneficiary over the lifetime of the beneficiary.