There is support growing in Congress to change an antiquated rule governing the creation of special needs trusts. Under current law, a self-settled special needs trust, a trust formed to accept assets from a disabled individual, can only be formed by a parent, grandparent, guardian, or a court. The law does not anticipate the possibility of an individual with a physical disability having the capacity to contract. This rule creates a barrier when trying to assist an individual with a disability in planning for their retirement. An estranged parent must be located to form the trust, or else permission for a court is required. These additional steps serve as a barrier that often discourages an individual with a disability from engaging in valuable planning.
A change in this rule would allow individuals with disabilities to plan for retirement. I will update this blog with any progress on the legislation.