Congress established first-party special needs trusts (SNTs) in 1993 with the intent to allow people with disabilities to remain eligible for public benefits, such as SSI and Medicaid, when they receive a lump-sum settlement or inheritance. Normally, receipt of a large sum of money would disqualify these individuals from the means-based governmental benefit.
SNTs generally may not pay for food, clothing, or shelter, which is what Social Security Income is designed to pay for. The SNT is used to supplemental the individual’s needs by paying for expenses such as physical therapy, medications, medical treatment, transportation, education, furniture, etc. Direct payments to the beneficiary are not permissible.
Currently, an SNT may only be established by a parent, grandparent, legal guardian, or court. They may not be established by the disabled beneficiary, even when he or she has capacity to do so. This is inconsistent with the requirements for pooled first party SNTs, which are administered by nonprofit organizations and were also created by Congress in 1993. Individuals with disabilities have always been able to establish pooled trust accounts for themselves.
Congressmen Glenn Thompson (R-Pa) and Frank Pallone, Jr. (D-NJ) recently introduced the Special Needs Trust Fairness Act of 2015, which is designed to make it easier for people with special needs to create their own first party SNTs. Congressman Frank Pallone, was quoted in a Press release issued by Congressman Thompson’s office, as saying that the “barriers that currently prohibit an individual from creating a Special Needs Trust, despite having the mental capacity to do so, have no basis in reality and place an undue burden on disabled individuals who are simply trying to make ends meet."
The Senate unanimously passed the bill on September 9, 2015. It has now been referred to the House Committee on Energy and Commerce.