Support the Special Needs Trust Fairness Act, 2015

By Saundra M. Gumerove, Esq.

Last week the United States Senate unanimously approved the Special Needs Trust Fairness Act of 2015 (the Act). While this is a great step forward to giving disabled people receiving supplemental security income (SSI) and Medicaid the ability to create special needs trusts themselves, it is imperative that everyone contact their Congressional representative to prevent this Act from dying in the House of Representatives.

What is a Special Needs Trust?

A special needs or supplemental needs trust (SNT) is a fund for the benefit of a person with a disability (the beneficiary). An SNT is a way for monies to be set-aside for a person with a disability without affecting their eligibility for government benefits. Currently, persons receiving government benefits cannot have over $2,000 in their name without losing their benefits.

There are two types of SNTs: first-party and third-party. A first-party SNT is created with money owned by the beneficiary. A parent, grandparent, legal guardian, or court must create a first-party SNT. Any money remaining in the first-party SNT at the death of the beneficiary goes to Medicaid to repay Medicaid for services received over the beneficiary’s lifetime. A third-party SNT may be created with funds from a family member or friend of the beneficiary (a “third” party). At the death of the beneficiary, the remainder funds may go to anyone the person who created the trust chooses.

SNTs are important because they give people receiving government benefits money for things that SSI and Medicaid will not pay for, such as vacations or entertainment

What is the Special Needs Trust Fairness Act of 2015?

The Act, if enacted by each state, will allow competent people with disabilities who are receiving government benefits to create first-party special needs trusts without having to ask a parent, grandparent, legal guardian, or court for permission. Currently, no matter his or her competence, any disabled person who wants to create a first-party special needs trust must have approval of a parent, grandparent, legal guardian, or the court.

Why is it important to contact your Congress representative and encourage them to approve this Act?

The Act amends the Social Security Administration provision that requires help from a disabled persons’ parent, grandparent, legal guardian, or the court to create a first-party SNT. This Act will greatly reduce the cost and difficulty of establishing a first-party SNT.

DON’T DELAY – CONTACT YOUR CONGRESSIONAL RESPRESENTATIVE TO APPROVE OF THE SNT FAIRNESS ACT TODAY!

What is a Special Needs Trust?

By Saundra M. Gumerove, Esq.

A Supplemental Needs Trust or Special Needs Trust is designed to hold assets for an individual who receives government benefits such as Supplemental Security Income or Medicaid. Typically, in order to qualify for these government benefits, you must qualify and have limited assets and income.

A Supplemental Needs Trust or Special Needs Trust can hold assets in almost any amount and the assets will not be counted or considered assets of the person receiving the government benefits. The funds in the trust are intended to be used to “supplement, but not supplant” government benefits. Thus the assets are intended to be used for almost anything except food, shelter and medical benefits paid for by government benefits.

What are the Types of Supplement Needs Trusts?

By Saundra M. Gumerove, Esq.

There are two types of supplemental needs trusts:

  1. Third Party Supplemental Needs Trust can be created by anyone except the individual with disabilities. The funds deposited into the trust come from someone other than the individual with disabilities.  The grantor or creator of this type of trust can designate who receives the balance of the funds in this trust upon the death of the beneficiary.
  2. First Party Supplement Needs Trust or Medicaid Payback Supplemental Needs Trust is funded with assets owned by the individual with disabilities. Most often these funds are the proceeds of a medical malpractice or personal injury lawsuit. This type of trust can only be established by a parent, grandparent, legal guardian or court. Medicaid is reimbursed for all the funds expended on behalf of the individual with disabilities upon the death of the beneficiary.