Bill Overview
Title: Special Needs Trust Improvement Act of 2022
Description: This bill allows a nonprofit charitable organization to be named as the remainder beneficiary of a Special Needs Trust (i.e., a trust that preserves a beneficiary's eligibility for needs-based government benefits).
Sponsors: Sen. Young, Todd [R-IN]
Target Audience
Population: People with disabilities who use special needs trusts
Estimated Size: 10000000
- Special needs trusts are a type of trust designed to ensure the financial future of individuals with disabilities who rely on government benefits.
- The bill allows for the inclusion of a nonprofit charitable organization as the remainder beneficiary of such trusts.
- This legislative change predominantly impacts individuals currently benefiting from needs-based financial support or their families who manage trust funds.
- Special needs trusts are more common in countries with a developed welfare system such as the United States.
- Globally, not all individuals with disabilities have access or need for special needs trusts due to variations in government support systems.
Reasoning
- The policy specifically enables nonprofit organizations to be named as remainder beneficiaries in Special Needs Trusts. This could have varying impacts depending on the individual situations of the beneficiaries.
- Many individuals with special needs have family members manage their trusts. Allowing nonprofits to be remainder beneficiaries might offer families peace of mind that excess funds will be used charitably.
- The impact will be more pronounced among families concerned about the trust management after the beneficiary's lifetime.
- Some families might see no direct impact, especially if their primary concern is the immediate financial safety of the beneficiary rather than future distribution.
- The policy might influence new trusts being set up, rather than those currently established, possibly impacting younger beneficiaries disproportionately.
Simulated Interviews
Unemployed (Chicago, IL)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- I think it's positive that the funds can go to a charity if there's any left after my needs are met.
- I worry less about the trust running out of money.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 8 |
Retired (Houston, TX)
Age: 65 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 15.0 years
Commonness: 8/20
Statement of Opinion:
- The policy gives me some reassurance about the future use of the trust funds.
- It's important to me that the money serves a good purpose if my child can no longer use it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Non-profit manager (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- This policy allows our nonprofit to better plan for future projects.
- It benefits our community by redirecting unused funds to worthy causes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 9 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
Attorney (San Francisco, CA)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- I see this policy as a tool to potentially expand my client's options.
- It makes trust planning for special needs families more comprehensive.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Retired nurse (Miami, FL)
Age: 70 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- This policy seems wise for ensuring funds support a good cause.
- It's nice to know my grandchild's fund can help others eventually.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 8 |
Graduate student (Boston, MA)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 9/20
Statement of Opinion:
- I hope more nonprofits are aware and will work with individuals like me.
- It feels secure to know there's a plan for unused funds.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 9 | 7 |
Teacher (Rural Alabama)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- The trust becoming a charity fund post-use feels right to me.
- It helps guide long-term financial planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Software engineer (Seattle, WA)
Age: 40 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- This policy ensures that even after my nephew's time, the funds can continue to do good.
- Nonprofit beneficiaries can help his peers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Financial advisor (Los Angeles, CA)
Age: 37 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 11/20
Statement of Opinion:
- I think it's beneficial for strategic long-term planning.
- Many will see the value in directing unused trusts to nonprofit causes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 9 | 8 |
Full-time caregiver (Denver, CO)
Age: 29 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- It's reassuring to know my sister's funds will be used for good when she's no longer in need.
- However, I focus more on immediate needs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 7 |
Cost Estimates
Year 1: $20000000 (Low: $15000000, High: $25000000)
Year 2: $21000000 (Low: $16000000, High: $26000000)
Year 3: $22000000 (Low: $17000000, High: $27000000)
Year 5: $25000000 (Low: $20000000, High: $30000000)
Year 10: $30000000 (Low: $25000000, High: $35000000)
Year 100: $50000000 (Low: $45000000, High: $55000000)
Key Considerations
- The role of nonprofit organizations as remainder beneficiaries could alter the landscape of special needs trusts, making them more attractive to families.
- There may be situations where disputes arise on the distribution of assets, depending on the structure of trusts and the nonprofits involved.
- Changes may occur in nonprofits' operations to manage newly acquired funds from trusts.
- Special needs individuals and their families are sensitive communities where such legislative fiscal impacts should be handled with care.