If you have a child with special needs - one who cannot care for himself or herself without adult assistance - what will happen when you're no longer around to help? Perhaps a relative will be available to help your child. Or, maybe no one will be able to fulfill your role.
Regardless of what your situation is, you need to plan for all possible outcomes. As part of your plan, you may want to create a special needs trust. A special needs trust is an excellent way for you to create a legacy of wealth for your child's care, without needing to worry about your child's ability to manage financial assets.
Wording required by a special needs trust
In addition to preserving wealth for the care of your child with special needs, a special needs trust will allow your child to continue receiving government benefits because any assets you leave for him or her will not be in your child's name. However, the trust will require some specific wording in order for it to be valid.
Here is what your special needs trust should include in terms of wording:
- A special needs trust document should state that its purpose is to "supplement and not supplant" government-provided benefits.
- The trust should also state that it is not intended to be a basic support trust.
- Wording to specify the authorization of the document as a special needs trust under the Social Security Operations Manual.
- Special language referencing Medicaid payback.
- An explanation of the Omnibus Budget and Reconciliation Act.
- Information about provisions relating to the United States Code.
Do you need to create a special needs trust?
Some parents of a child with special needs wrongly believe they don't have enough money to set up a special needs trust. However, there are a lot of different strategies available to parents without much financial capital, like financing a special needs trust with a life insurance policy.
Ultimately, parents will want to learn about all the trust planning options available to them before they choose which strategies are right for them and their families.