Individuals who live in Georgia might know about a federal law that was passed earlier this year called the 21st Century Cures Act. The act was signed into law by President Obama toward the end of 2016. The law allows individuals with disabilities to create their own special needs trusts (SNTs).
Special needs trusts are irrevocable trusts for people with disabilities who receive public assistance, such as Medicaid. An SNT holds the assets of the individual, and they can be created by the individual, the family of an individual or by either one. Their assets can be added to a pool trust that holds the assets of other individuals with disabilities.
After the Omnibus Budget Reconciliation Act of 1993, it was laborious for individuals with disabilities to create their own trusts. This difficulty came about because the 1993 act did not view people with disabilities as legally competent to enter the contract that a trust entails. Individuals with physical disabilities but who had the legal capacity to enter a legal agreement had to ask their parents or guardians to establish the trust for them. If they were without relatives, they had to prove to the courts that they were capable of entering a binding agreement. After the 21st Century Cures Act, these individuals can now create their own self-settled trusts on a needs basis without the help of relatives and without proving their competence in court.
Individuals who receive Medicaid might decide to use an irrevocable trust as part of their estate planning. It might be useful to discuss other options with a lawyer since in many cases trusts must reimburse Medicaid after the death of the beneficiary. An estate planning attorney may be able to provide clients with other options for financial planning.