Who Can Create a Special Needs Trust?

disabled woman setting up special needs trust

In 1993 Congress passed special laws that amended the Medicaid statute.  A portion of the amendment to the Medicaid statute concerns the establishment of a Special Needs Trust for a disabled beneficiary who is less than 65 years of age.  This federal law is set forth in a 1993 statute that is commonly referred to as OBRA ’93.

OBRA ’93 allows a disabled individual who is less than 65 years of age to deposit any amount of assets into a Special Needs Trust, as long as it is for the sole benefit of that individual, and any money left in the trust at the time of death will be paid to the State.  For more than 20 years only a limited number of individuals could establish that Special Needs Trust for the disabled individual.  Until recently only a parent, grandparent, legal guardian or a Court could establish a Special Needs Trust for the disabled individual.

In December 2016, President Obama signed into law the 21st Century Cures Act.  Section 5007 of this statute includes the “Fairness in Medicaid Supplemental Needs Trust”.  Many elder law attorneys refer to this as the Special Needs Trust Fairness Act.  According to this law, a Special Needs Trust can be established by any mentally competent individual who is disabled.  In other words, the trust does not have to be established by a parent, grandparent, legal guardian, or a Court.