Special Needs Trusts are often vitally important lifelines providing the means of financial security for persons with disabilities. One flaw in the current system is that "self-settled" special needs trusts that are to be funded with the disabled person's own assets and/or income can only be created by a parent, grandparent or legal guardian for the disabled person, or by a court.
This statutory restriction effectively requires mentally competent but disabled individuals to find a permitted third party to "create" the trust. If there is no available parent or grandparent, then the disabled person must file a time consuming and often expensive court petition to have the special needs trust put into effect.
Hopefully this unnecessarily burdensome restriction will be a thing of the past. On May 23rd, Reps. Glenn Thompson of Pennsylvania and Frank Pallone of New Jersey introduced the Special Needs Trust Fairness Act of 2013. If enacted, this bill will permit competent adult disabled beneficiaries to create their own self-settled special needs trusts.
More information about this exciting development can be found here.
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