Upstate Estate Law, P.C. Blog

Medicaid Special Needs Trusts have received much needed legislative attention from the United States Congress and President of the United States. HR 34 was signed into law by President Obama on December 13, 2016. Title 5, Section 5007 of HR 34 is entitled “Fairness In Medicaid Supplemental Needs Trusts” and contains exactly two sentences designed to correct a 23 year old omission made in the Social Security Act.

Section 1917(d)(4)(A) of the Social Security Act (42 U.S.C. 1396p(d)(4)(A)) says that assets held in trust for a disabled individual’s benefit will not be counted as a resource for Medicaid-eligibility purposes, as long as by the trust’s terms the State will be paid back after the individual’s lifetime for Medicaid benefits paid for the individual. This statutory section brought into existence what is now called the “first party special needs trust.” Unfortunately though, the statute limited who may establish such a special needs trust by directing that the trust must be established “by a parent, grandparent, legal guardian of the individual, or a court.”

Absent from this list is the individual him/herself. There was not really any justification to not allow an adult competent but disabled individual to set up their own special needs trust. If the individual’s parents and grandparents were not available, and there was no legal guardian appointed, the adult competent but disabled individual had no other option but to begin a Court proceeding and request a Court’s permission to establish a special needs trust for the individual’s benefit. This was a waste of precious time and resources that could be easily fixed via an amendment. And after 23 years it has finally been fixed.

Beginning December 13, 2016, an individual may now establish their own first party special needs trust. HR 34 has amended Section 1917(d)(4)(A) to now state that a special needs trust must be established by “the individual, a parent, grandparent, legal guardian of the individual, or a court.”