The special language incorporated into the Special Needs Trust takes into consideration the federal law codifying such type of trusts as recorded in USC Title 42, 1396p(d)(4)(A). As well, the Omnibus Budget Reconciliation Act of 1993 (OBRA 93) defined and thus established a precedent for the authority of this federal law. Notwithstanding, a few states attempt to disallow or least ignore, for public policy purposes, the validity and purpose of this trust. The state of Colorado, for example, enacted legislation that restricted the funding of such trusts to “the proceeds from any settlement or judgment based on an action or claim for personal injury… on behalf of the trust beneficiary…”. Legislation (or court decisions) of this kind apparently ignore such cases as Matter of Moretti, 606 N.Y.S. 2d 543 (Sup. Kings Co. 1993), pp. 547-548. This case stated “To the extent that… provisions of any… State statutes or regulations may be construed as being inconsistent with, more restrictive than, or in contravention of the spirit of OBRA ‘93”, they are not binding on this court (because) any such inconsistency would be in violation of the supremacy clause of the United States Constitution.”

As you can see, special needs planning with trusts is clearly allowable by federal and most state law. However, there are no ironclad guarantees. This approach can only be considered as a “best effort” action for the concerned, loving parent to implement on behalf of his/her disabled child. Regardless of the outcome, this type of planning is a distinct and positive effort by any parent in this situation to show forth genuine love for his disabled child, even after the grave.