Law Office of John S. Palmer Attorney at Law

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Special Needs Trust Fairness Act of 2015

Posted Sunday, April 5, 2015 by John S. Palmer

Another attempt is being made to amend the manner in which a special needs trust may be established for a disabled person. If the trust is to be funded with the disabled person’s assets, then federal law requires that the trust be established by his or her parent, grandparent, guardian, or a court of competent jurisdiction.

When Congress enacted the law permitting such trusts, it most likely required them to be established by third parties to avoid the disputes that could arise over the validity of a trust created by a disabled individual (e.g., whether he or she had the legal capacity to create it or was susceptible to undue influence over its provisions).

Over time, a segment of the elder law community—and some members of Congress—have come to believe that forcing disabled persons to rely on others to create so called “self-settled” special needs trusts unfairly increases the cost of establishing them. Hence, Rep. Glenn Thompson of Pennsylvania has reintroduced a bill (HR 670) that would also permit such trusts to be established by disabled individuals directly. A companion bill (S 349) has been reintroduced in the Senate by Senators Bill Nelson of Florida and Charles Grassley of Iowa.

Past versions of the same bill failed to go anywhere, and gives the pending bills a 1% chance of being enacted.

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Law Office of John S. Palmer11911 NE 1st St, Ste. B204,Bellevue, WA 98005-3056