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Creating Your Own Special Needs Trust


Article by Oren Ross

Photography by Oren Ross

It used to be that an error in the drafting of the Social Security Act would prevent individuals with disabilities from setting up special needs trust to hold their funds, forcing them to recruit the help of a parent or grandparent to accomplish that. Recent changes in the law have enabled capable individuals with a disability to create and fund their own special needs trust without requiring them to be assisted by a family member or by a court. Our firm explains the updates in the law, and how they may benefit those eligible for an Special Needs Trust ("SNT").

What Is the 2013 Special Needs Trust Fairness Act and How Does it Affect SNTs?

The 2013 SNT Fairness Act was created as a response to current laws that required any disabled individual to be assisted by a family member or legal guardian to set up an SNT—even if the disabled person had perfect mental capabilities to do so on his or her own, through an attorney. If the disabled person did not have a legal guardian or parent, he or she was required to create court-supervised trusts with high legal fees that could quickly deplete the funds meant to supplement the disabled person’s daily living expenses.

The new measure was enacted by President Obama in 2016 and allows mentally capable individuals with disabilities to create and fund their own special needs trusts, without requiring a guardian or court supervision. This allows disabled individuals to save time and money by seeing an attorney and creating their own first-party special needs trusts to maintain their standard of living, while securing the rights to receive government benefits.

Can the Beneficiary of a Special Needs Trust Also Be the Trustee?

As a general rule, the trustee of an SNT will seldom be the beneficiary. Managing a special needs trust requires a lot of time and knowledge, and in many cases, the beneficiary cannot be the trustee because that would mean the funds in the trust would be considered a resource to the disabled person and would count against SSI and other government benefits eligibility. This would defeat the purpose of starting an SNT in the first place. The changes in legislation allow for disabled individuals to create their own SNT, but once created, the trust will still require a non-spousal trustee to be responsible for managing the trust and distributing funds. It is best to save time and avoid undue stress by assigning a knowledgeable and dependable trustee that can manage the SNT funds more effectively.

Do I Need an Attorney to Create My Special Needs Trust?

Creating and funding your own first-party special needs trust can be a daunting task, depending on the complexity of your assets and your situation. While it is optional for you to hire an attorney when setting up your SNT, it is highly advisable to do so. A properly drafted SNT takes time and requires knowledge of the current laws that may affect it. An attorney can help you speed up the initial set-up process and ensure all the terms in your SNT are correct and working for your benefit. At Oren Ross & Associates, we have a dedicated team of special needs trust lawyers ready to assist you. Contact us at (404) 436-1752 to get started.