The change outlined in a bill known as the Special Needs Trust Fairness Act was approved unanimously by the U.S. Senate last year and passed the House of Representatives in September.
But due to some differences in the House version, the measure returned to the Senate and was ultimately bundled within the 21st Century Cures Act, which Obama signed Tuesday.
The option for people with disabilities to create their own special needs trusts takes effect immediately.
“This provision replaces an antiquated law that was unfair and outmoded in its treatment of people with disabilities,” said Sen. Chuck Grassley, R-Iowa, who sponsored the Special Needs Trust Fairness Act.
“Those who want and need to set up a trust to help pay for their care should be able to do so, plain and simple,” Grassley said. “This measure allows individuals to act in their own interests with their own assets without having to rely on a family member or the courts.”