In 1993, Congress enacted Section 1917(d)(4)(A) of the Social Security Act, authorizing the establishment of special needs trusts (also called first-party trusts and self-settled trusts).  First-party special needs trusts enable disabled individuals to set aside their funds to pay for supplemental care while enabling those individuals to remain eligible for government benefits. See 42 U.S.C. § 1396p(d)(4)(A).  Following suit, the New Jersey Supreme Court has long recognized special needs trusts as effective asset protection tools which can be used “to plan for the future of a disabled minor or adult . . .”  See Saccone v. Board of Trustees of Police and Firemen’s Retirement System, 219 N.J. 369, 383 (2014).  First-party special needs trusts are used when individuals with disabilities have assets in their own name, (e.g., due to a lawsuit settlement, direct inheritance, savings or gift), yet want to be eligible to receive government benefits such as Supplemental Security Income (SSI) and Medicaid.

Unfortunately, under the current law, individuals with special needs are not authorized to establish their own special needs trusts even if they have the requisite mental capacity and despite the fact that the trust will be funded by assets belonging to them.  Rather, a First-party special needs trust can only “be established by a parent, grandparent, legal guardian of the individual, or a court.” See 42 U.S.C. § 1396p(d)(4)(A).  Accordingly, if an individual with special needs does not have a parent, grandparent or legal guardian, that individual must petition the Court to establish the first-party special needs trust, even if that individual is competent.  This process can be costly and time consuming. A parent, grandparent, or legal guardian, however, can establish a first-party special needs trust for the disabled individual in a relatively short amount of time and is not beholden to the Court’s schedule.  While likely a drafting oversight, requiring disabled individuals to have a parent, grandparent, legal guardian or a court to establish their first-party special needs trusts implies that all individuals with disabilities lack the requisite mental capacity to enter into a contract and handle their own affairs.  This presumption, however, is unwarranted and offensive.

The Special Needs Trust Fairness Act of 2015 (H.R. 670) introduced in February 2015 by Congressmen Glenn Thompson (R-Pa) and Frank Pallone, Jr. (D-NJ), corrects this problem by adding the individual with special needs to the list of people who can create a first party trust on his or her behalf, giving those individuals the same right to create a trust as a parent, grandparent, guardian, or court.  The Special Needs Trust Fairness Act of 2015 proposes to add the words “the individual” to Section 1917(d)(4)(A) of the Social Security Act, permitting disabled individuals to establish their own special needs trusts without a parent, grandparent, legal guardian, or a court.  If enacted, persons with disabilities who have no close family would no longer be forced to petition a court and undergo unnecessary legal fees and delays.

On September 9, 2015, the United States Senate passed a companion version of the Special Needs Trust Fairness Act of 2015 by unanimous consent. Hopefully, there will also be swift passage in the House of Representatives.

Lori Wolf spoke with The New York Times about the challenges of financial planning and trusts for troubled adult children. See her full insight in the article, “For Parents With Troubled Adult Children, Financial Hurdles Abound,” in the link below.


We are pleased to share this memo from Bergen County’s United Way who is now accepting applications for its Very Special Homes© community in Tenafly.

“With the support of the Tenafly community and in partnership with the Madeline Corporation, a non-profit affordable housing developer, BCUW is building six units of special needs housing for individuals with developmental disabilities such as Down’s syndrome, autism, cerebral palsy and intellectual disabilities.  The one and two-bedroom units are designed for highly independent individuals who are capable of living on their own with some supports.  We expect to complete construction in the fall and welcome the tenants by Thanksgiving.”

Please find the application package for your convenience below.

UW Tenafly Cover Letter Final

UW Tenafly VSH-Application(2015)_FORM-1

UW Tenafly VSH-Checklist(2015)_FORM-1

UW Tenafly VSH-Disability Certification(2015)_FORM-1

UW Tenafly VSH-ReleaseofInfo(2015)_FORM-1