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Margaret Ann Hendrick

2244 Faraday Avenue
Carlsbad, California 92008

(760) 431-0005

(619) 890-9507

The Special Needs Trust Fairness Act Gives Mentally Competent Individuals with Disabilities the Power to Independently Establish a First Party Special Needs Trust


August 1, 2017

The Special Needs Trust Fairness Act provides that mentally competent individuals with disabilities can now make their own decisions regarding establishing a first party special needs trust and are no longer forced to rely on others to advocate for their needs.

As part of a Medicaid overhaul in 1993 Congress enacted The Omnibus Budget Reconciliation Act of 1993 which permitted a parent, grandparent, guardian or court to establish a first party special needs trust for individuals with disabilities, under the age of 65, using the individual’s own assets, without jeopardizing government benefits. Unfortunately, the 1993 Act did not include a provision allowing a mentally competent individual with a disability to independently establish a first party trust. Instead, they had to rely on a parent, grandparent, a legal guardian or a petition to the court to do so. The inability to establish their own trust was particularly cumbersome for those individuals who did not have a living parent or grandparent to set up a trust for them and did not have a disability that would warrant the need for a guardian.

The requirement that another person or a court create the trust often resulted in burdensome legal fees and extended wait periods for mentally competent disabled adults wishing to set up their own special needs trust. Many disability advocates believed the law was discriminatory and it further hindered the independence of competent individuals with disabilities to make their own life decisions. All Congress had to do to correct the error was to add the word “individual” to the Act. This was finally accomplished in December 2016 when the Special Needs Trust Fairness Act was signed into law as part of the 21st Century Cures Act. This new federal law corrects the long-standing error in the previous law and now allows mentally competent individuals with disabilities to establish their own first party special needs trust in those circumstances where it is appropriate to do so.





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