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Act changes things for Medicaid beneficiaries with disabilities

On Behalf of | Jul 31, 2017 | Firm News, Trusts |

Ohio residents who benefit from Medicaid might be familiar with special needs trusts (SNTs). These irrevocable trusts make it possible for an individual with disabilities to store their assets. In a first-party special needs trust, the trust can only consist of assets that belong to the beneficiary of the trust. Before the 21st Century Cures Act, which became law on Jan. 1, individuals with disabilities faced hurdles in creating first-party special needs trusts.

In 1993, the Omnibus Budget Reconciliation Act became law. The draft that became judicially enforceable did not recognize individuals with disabilities as having the legal capacity to create trusts. Therefore, individuals with disabilities who were legally competent, and thus able to create a trust, had to have a family member, such as a parent or grandparent, establish the trust for them.

The lack of recognition of individuals with disabilities as having the capacity to legally create trusts led to even more impediments for prospective trustees who did not have family members who could create the trust for them. These individuals were forced to pay the legal fees necessary to have the court recognize their legal competence so they could create a self-settled special needs trust. Nonetheless, the 21st Century Cures Act recognizes the legal capacity of competent individuals with disabilities who need to establish a trust that holds their own assets. This means they can create the trust without the obstacle of requesting help from family or seeking acknowledgement of their competence from a court.

People who receive benefits from Medicaid might be thinking about their long-term care needs. Those who are considering their future may consult a lawyer about their legal options. An attorney could discuss the possibility of opening a trust from which monthly payments could be disbursed to a beneficiary.

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