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What language does a special needs trust require?

On Behalf of | Jul 3, 2018 | Firm News

Parents of special needs children might want to consider setting up a special needs trust. Such a trust will allow parents to leave money and assets behind for the benefit of their child, without their child actually owning the assets personally. This allows the child to continue receiving vital government benefits while benefiting from a higher quality of life offered by the financial funding of the special needs trust.

Special needs trusts occupy a special status, however, and they require specific wording. Keep reading to find out what kind of legal points a special needs trust should address.

The language required for a special needs trust

  • The trust should state that it is intended to offer “supplemental and extra care” in addition to care already offered by the government.
  • The trust should state that it is a “basic support trust.”
  • Trust grantors need to make sure they do not include the Crummey Clause estate tax provision in the trust.
  • The trust should make reference to the Social Security Operations Manual where it authorizes the use of special needs trusts.
  • The trust should feature language referencing payback to Medicaid.
  • The trust should reference exception to the Omnibus Budget and Reconciliation Act.
  • The trust should feature copies of related provisions from the United States Code.

Are you the parent of a special needs child?

Considering the amount of assets that will be necessary to appropriately fund a special needs trust, many parents may believe that they don’t have enough money or assets at their disposal to create such a trust. However, middle-income parents without significant assets don’t need to worry about financing their special needs trusts. Most parents fund their special needs trust with a life insurance policy that lists the special needs trust as its beneficiary.

As long as the parent words the special needs trust appropriately and plans the right provisions for his or her child, there’s no reason for any parent to skip this vital estate planning strategy, which will provide a better life for his or her children for many years to come.


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