Estate Planning News
New legislation finally corrects what has long been considered an error in prior law regarding establishment of First-Party Special Needs Trusts for disabled individuals with mental capacity.
On December 13, 2016, the President signed the 21st Century Cures Act. Section 5007 of the legislation includes the Special Needs Trust Fairness Act that makes a simple but very significant modification to 42 U.S.C. 1396p(d)(4)(A). Previously, a first-party Special Needs Trust had to be “established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court.” The amendment now allows the individual to establish his or her own first-party special needs trust (“established for the benefit of such individual by the individual, a parent, grandparent, legal guardian of the individual, or a court”).
The effective date is for new trusts established on or after December 13, 2016, the date of enactment.