by Anita Schnee, Attorney at Law
The law used to be that a disabled person had to rely on others to create a trust, to keep government benefits and, at the same time, to safeguard inherited money or awards won in lawsuits. Now, since late 2016, disabled people are able to act on their own, independently. This is great news.
Consider Dora, single mother of two small children. She became unemployable after she lost the use of her legs in a car accident. She sued the drunk driver, but her case took years to wend its way through the courts. While Dora waited for her award, she had to depend on government benefits to pay for food, housing, and medical costs.
Finally Dora won her suit. But if she accepted the money directly, she would lose her benefits. She would have had to use the award money to pay for her and her kids’ support and, in the end, there might be nothing left for her children when she passed.
She could have solved the problem by putting the money into a special trust. But before 2016, the law didn’t allow her to do this by herself. The law required parents or grandparents to create the trust for her. Dora had no family, so either she would have had to hire a lawyer to petition a court, or she could have used a “pooled trust” and a trustee not of her choosing. Both these options imposed extra expense. Worse, if she had to go to court, she would be spending money not on her needs, but, rather, on attorneys’ fees, bonds, filing fees, and expensive court accountings.
And what was the reason for this extra burden? Apparently the law just assumed that disabled people weren’t smart enough to act for themselves! This unfairly demeaned the disabled and it was simply wrong.
The wrong was finally fixed, after twenty-three years of activism by disabled people and the National Academy of Elder Law Attorneys (NAELA). Thanks to a bipartisan effort in Congress, President Obama signed the new law on December 13, 2016. Now the disabled can enjoy the dignity they deserve.
Here is what Dora can do now, thanks to the change in law.
As long as she remains under age 65, Dora can put her award into her own “self-settled” trust, known variously as a “(d)(4)(a)” trust, or a “supplemental needs trust,” or “special needs trust” (SNT). She can continue to draw benefits to pay for her basic living and medical expenses. She can use her trust money to improve her quality of life and to pay for needs that benefits do not cover. On her death, as long as the trust repays the government for the cost of care it provided during her life, she could leave whatever remained to her children.
These trusts are highly detailed, and the manner in which trust money can be spent requires considerable care, so Dora would still be best advised to consult a lawyer. But she can now act independently, and she can enjoy significant savings in paying her lawyer to write an SNT instead of going to court.
This is one of those uplifting stories where everybody wins. Attorney Michael J. Amoruso, a leading elder-law advocate and co-founder of legal-education community Eldercounsel, attended the signing ceremony at the White House accompanied by his handsome seeing-eye dog Demitri. As Mr. Amoruso said then, “I am proud to know that with fortitude and perseverance, all Americans are empowered to make a positive change.”
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Anita Schnee is an attorney licensed in Arkansas with the law firms of the Elder Law Practice of Cash and Whatley, and Mitch Cash Ltd.
* This article appears on sites for Mitch Cash Law, Ltd. and the Elder Law Practice of Cash and Whately.
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