Bill would remove barriers preventing mentally competent disabled individual from establishing special needs trust

New federal legislation, if passed, will eliminate the barrier that currently prevents disabled but mentally competent people from setting up their own Special Needs Trusts (aka Supplemental Needs Trusts). 

Right now, under Title XIX of the Social Security Act, only a parent, grandparent, guardian, or the court may set up a first-party special needs trust for a disabled individual, even if the individual is an adult and mentally competent. This requirement imposes an unnecessary burden on a disabled individual whose parents and grandparents may no longer be alive or who are unwilling or unable to assist. It also creates unnecessary additional work for our already overburdened court system. Says National Academy of Elder Law Attorneys President Gregory French of the current law: "It is wasteful, unfair, and wrong for the laws to prohibit individuals who have mental capacity from creating their own special needs trust just because they have a physical disability."

House Bill 2123, the Special Needs Trust Fairness Act of 2013 introduced by U.S. Rep.Glenn Thompson (R-Pennsylvania) and US.Rep.Frank Pallone (D-New Jersey), would amend the current law to enable a mentally competent beneficiary to independently create and fund his/her own special needs trust. 

A Special Needs Trust is an instrument that holds funds for a disabled beneficiary. Funds are not directly available to the beneficiary, but are released to the beneficiary for services that do not replace, but rather supplement, the services provided through Medicaid or Supplemental Security Income (SSI). This permits the beneficiary to to remain below the required maximum asset level, retaining eligibility for vital public benefits. 

 The bill has not yet been voted on in the House. You can track its progress here.