On December 13, 2016, the President signed into law the 21st Century Cures Act. Section 5007 of this Act affects the Special (or Supplemental) Needs Trusts, dealing specifically with the d(4)(A) Special Needs Trusts. A d(4)(A) Special Needs Trust is a trust created for the sole benefit of someone under the age of 65 who is disabled. The d(4)(A) Special Needs Trust is established by the beneficiary’s parent, grandparent, legal guardian, or the court, and it is funded with the beneficiary’s own assets. This type of trust must include repayment language, which states that any remaining assets at the beneficiary’s death must go to any state Medicaid agency (up to the amount paid by the state for the beneficiary under the Medicaid program).
For d(4)(A) Special Needs Trusts created before December 31, 2016, the trust has to meet the following requirements to be valid:
- The trust contains the assets of an individual who is under 65 and disabled.
- The trust is established for the benefit of the individual through the actions of a parent, grandparent, legal guardian, or a court.
- The State will receive the remaining amount in the trust after the individual dies up to an amount equal to the total Medicaid assistance paid on their behalf.
With the new Act signed into Law, an additional provision has been added to the requirements for d(4)(A) Special Needs Trusts (dated after December 31, 2016). Now, the trust can be established for the benefit of the individual through the actions of the individual, parent, grandparent, legal guardian, or a court. All other requirements still apply. This is good news for those who may utilize this type of trust for their disabled loved ones! Our firm specializes in Trusts and Estates. We would be happy to help you create this trust for yourself or a loved one who is under 65 and disabled.