Law Office of John S. Palmer Attorney at Law

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Special Needs Trust Fairness Act of 2013

Posted Tuesday, July 2, 2013 by John S. Palmer

A bill was introduced in Congress on May 23, 2013 seeking to amend the manner in which a Special Needs Trust may be established for a disabled person with his or her own assets (often referred to as either a self-settled or “first party” Special Needs Trust.)

A trust established for the benefit of a disabled individual and funded with assets belonging to a third party (such as a parent of a disabled child) may be established directly by the third party. However, in order for assets belonging to a disabled individual and held by a self-settled Special Needs Trust to be considered exempt for SSI or Medicaid eligibility purposes, current federal law only permits the trust to be established by a parent, grandparent, legal guardian of the disabled individual, or a court of competent jurisdiction.

The bill before Congress (H.R. 2123) would also permit such trusts to be established by the disabled individual directly, provided he or she had the requisite legal capacity to do so.

The bill’s sponsor, Rep. Glenn Thompson of Pennsylvania, has posted a statement explaining that the purpose of the bill is to stop forcing disabled individuals with limited resources to incur “arbitrary and expensive legal fees and extended wait periods” to create a self-settled trust.

Although the bill has the support of the National Academy of Elder Law Attorneys and various organizations who advocate for the disabled, it has been given an 8% chance of getting past committee and 3% chance of being enacted by

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