A Brief History of the Trust
This tool has been in use for a long time to protect the disabled, especially those who are not capable of managing their own affairs due to their condition. Its basis is embedded in years of case law. However, it wasn't until 1993 when supplemental needs trusts gained official recognition in Congress. The Omnibus Budget and Reconciliation Act of that year contained amendments that stated the scope and limits of the trust. The act also contained its nature and definition, the benefits that can be gained by the beneficiary, and the implementing rules that must be strictly followed by all.
The Rationale behind Its Creation
Persons with disability will usually enjoy a measure of support from the government as part of its social projects. This legal document is meant to give supplemental care above what the federal and state benefits can provide. Rarely will the government be able to shoulder 100% of the individual's needs so it is the job of the trust to step in and close the gaps. Setting one up for a loved one is ensuring that he or she will have nothing to worry about in terms of health and treatments if Medicaid falls short. The funds also allow spending for vacations and other forms of entertainment for a vibrant life.
Guaranteed Financial Security
Some people question the need for drafting this document when they could use other forms of trust or simply rely on their family's vast resources. It should be emphasized that the disabled have specific requirements that other legal tools cannot provide. Only this allows a sizable amount of assets to be held for an individual without taking away the possibility of receiving government benefits. Whatever happens to the family, the loved one will have guaranteed financial security. The funds will also enjoy shielding from any seizures or creditor payments. Even if the beneficiary is sued in the future and forced to pay for damages, the funds will be intact.
When and How to Create the Trust
It is important to note that this type of legal remedy is a crucial aspect of long-term care planning, and must be accomplished prior to the beneficiary's 65th birthday. It can be created early in life if a child manifests disabilities and parents want to provide financial protection right away. The wording must be carefully constructed to ensure that the person receives the full protection offered by the law. It must explicitly state that the trust is not for basic support but is actually for supplemental and extra care beyond what the government can give. The Crummey clause estate tax provision should not be included. A reference to the law which covers it must be present.
Hiring an Expert Lawyer
Due to the technical nature of the document, it is best to hire an attorney that specializes in this field of law. This would ensure that all of the requirements are met such that the trust can pass even the most thorough scrutiny. Grantors will be able to have peace of mind knowing that their beneficiary's needs are going to be covered henceforth. The lawyer will be an excellent resource if you need any parts of the special needs trusts explained be it the coverage, procedure, implementation, or other important aspects.