Parents of special needs children may want to create a special needs trust to provide for their kids in the event the parents die or become incapacitated. Such a trust brings a great deal of peace of mind. Because it will allay the all-encompassing fear of "Who's going to take care of my child when I'm gone?", a special needs trust should be a part of every estate plan belonging to a parent caring for a child with a severe disability.
A special needs trust will require specific language in order for it to be effective. Here is the wording that your trust will require:
- The trust should say that it's intended to offer "supplemental and extra care" in addition to regular government benefits.
- The trust should say that it's being created as a "basic support trust."
- You do not want to include an estate tax provision in the trust. These are referred to as "Crummey Clauses," and you should not put such a clause in your trust.
- Refer to the Social Security Operations Manual where it authorizes the use of a special needs trust.
- Put language in the trust that refers to Medicaid payback.
- Include language that explains the Omnibus Budget and Reconciliation Act exception.
- Copy the relevant portions of the United States Code.
Creating a special needs trust is not an entirely straightforward process. Parents wishing to protect the future of a special needs child may also worry about special needs trust financing. However, even if you don't have enough money to finance a special needs trust, you can take out a life insurance policy that will fund the trust in the event of your death or incapacitation.