Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.


The Special Needs Trust Fairness Act (the “Act”) was signed into law on December 14, 2016. The Act amends federal law to enable disabled individuals to establish their own first-party payback Special Needs Trusts under 42 U.S.C. § 1396p(d)(4)(A). A first-party funded Special Needs Trust will enable a disabled individual, who receive assets outright, including through a gift, inheritance, personal injury settlement or child support, to protect such assets for their future use while remaining eligible for essential means-tested government benefits (Supplemental Security Income and Medicaid). The Act will amend Section 1396p(d)(4)(A) of the Social Security Act to exclude first-party funded Special Needs Trust as a transfer for less than fair consideration and countable asset. This amendment will only apply to trusts established on or after the date of the enactment of the Act. Prior to the passage of the Act, federal law required disabled adults who were capable of handling their own affairs (and thus without legal guardians) to rely upon their parents, their grandparents or the courts to establish a first-party funded non-pooled payback Special Needs Trusts for their benefit. This requirement contradicted the fact that such Trusts were being funded by the disabled individuals with assets legally belonging to them (i.e. not third-party funds). This requirement was also inconsistent with the law governing the creation of Pooled Special Needs Trust which allows disabled individuals to create their own first-party funded Pooled Special Needs Trust with non-profits.