America believes that people with disabilities should have the same rights that all Americans enjoy. Yet, under current law, there is a presumption that persons with disabilities lack the mental capacity to enter into a contract.
An individual with disabilities who has mental capacity is not legally allowed to create his or her own "special needs trust" (SNT). This is an insulting disparity to members and advocates of the disability community. The law needs to be changed to reflect the capability of people with disabilities, and our Sen. Rockefeller is leading the way.
In 1993, Congress recognized the use of SNTs in the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993). SNTs allow assets to be held in a trust to supplement daily living expenses when government benefits alone are insufficient, thus protecting the individual against the risk of complete impoverishment. The SNT can be used to pay for such things as personal care items, medical equipment, clothing or a computer.
Unfortunately, the way current law is written, in order to have the benefit of a disabled person's trust called a (d)(4)(A) trust, the trust must be established by a parent, grandparent, legal guardian of the individual or a court. Who is missing from this list of eligible trust creators? That's correct ... the individual. The law does not allow a disabled individual to create a trust for his or her own benefit.
In order to qualify for Medicaid or SSI, a person must meet financial thresholds. The SNT hedges against the risk of complete impoverishment and the inability to meet what most of us consider basic living needs. In exchange for that protection, upon the disabled individual's death, the state is reimbursed from the trust assets for Medicaid benefits paid to the individual during his or her lifetime. Following in the footsteps of the ADA, this concept has helped advance the quality of life and opportunities for those with disabilities.
The National Academy of Elder Law Attorneys (NAELA) is working to change this injustice. NAELA thanks Sen. Rockefeller for being an original cosponsor of the Special Needs Trust Fairness Act (S. 1672). This legislation would allow people with disabilities to create their own SNTs without having to ask a parent, grandparent, or legal guardian or petitioning the court. This bill simply adds two words to the current statute: "the individual." NAELA strongly urges the entire West Virginia delegation to co-sponsor this legislation (H.R. 2123/ S. 1672).
The Special Needs Trust Fairness Act is supported by many groups including the American Association of People with Disabilities, Easter Seals, the Special Needs Alliance, United Spinal Association, and the Academy of Special Needs Planners. Recently, the bill was included in the passed Senate Finance Committee sustainable growth rate (SGR) package. We urge Congress to make this common sense and cost-neutral change to USC §1396p(d)(4)(A) to insert the phrase "the individual" so that those Americans who have disabilities can regain the dignity they deserve and remove the misplaced presumption that people with disabilities lack capacity due to their disabilities.
Winton practices estate planning and elder law in Charleston.