A new avenue has opened for those who want to not only care for their loved one affected by disability, but also support the charitable organizations that are so vital for their loved one’s care. The Special Needs Trust Improvement Act of 2022 now allows for a charitable organization to be designated as the remainder beneficiary of a special needs trust. The Act was signed into law on December 29, 2022 as part of the massive Consolidated Appropriations Act, and became effective in 2023. 

HOW IT CHANGED THE LAW

Back in 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act enabled families planning for the care of their loved one affected by disability to put retirement savings income into a special needs trust, and to have the funds of that trust be distributed over the lifetime of the individual rather than the otherwise applicable 10-year default time period. This was an important step, and a great tool for those who wished to plan for the care of their loved one affected by disability. 

But an important piece was missing. When planning for the future, families not only want to care for their loved one for so long as they have need, but also support the charitable organizations that have made a difference in their loved one’s life once the needs of the individual have been met. When such an organization has been a great gift to your family, you want to both thank them, and pay if forward to help them continue to help others. But the way the law stood prior to December 29, 2022, you could not name a charitable organization as a remainder beneficiary without jeopardizing the tax advantages of the special needs trust itself.

That was the problem that begged to be set right. With just a few sentences, the Special Needs Trust Improvement Act of 2022 fixed the problem.

WHAT THESE CHANGES MEAN

These few sentences have the potential to make a very large difference for organizations that serve individuals with chronic needs and disabilities. For those of us — like my family — whose lives have been touched by disability, we know the incredibly important part that these organizations play in our lives, the lives of those affected by disability, and the community as a whole. We also know the pandemic, pervasive staffing shortages, and budget cuts have put enormous strain on these organizations, including financial strain. But the Special Needs Trust Improvement Act of 2022 now provides us a new way to help ensure these organizations continue their important work with no penalty to our loved one(s).

WHAT YOU CAN DO

If you do not have a special needs trust, consider the benefits of setting one up.  This form of estate planning was created to help you plan for and care for your loved one affected by disability.  And if you create a special needs trust, take advantage of the new opportunity the law gives you: name a charitable organization as the remainder beneficiary.

Or, if you already have a special needs trust, inquire if it can be amended to take advantage of this great new opportunity. Passenger Law PLLC is available to help you with this process if you wish to create or amend your special needs trust.

Leonard Kuyvenhoven

Proud Parent and Legal Assistant, Passenger Law PLLC