How Should Special Needs Trusts Be Worded?

special needs trusts in alabama
A special needs trust is a specific type of trust fund for people with physical or mental disabilities, created with the unique needs and lifestyle of that person in mind. These trusts are made to ensure that the beneficiary does not lose any government benefits (like Medicaid or SSI) to which they are entitled.
In order for a special needs trust to function properly and protect the beneficiary’s government benefits, many strict requirements must be met. One of these is that the trust must be worded correctly — but what does that mean? Read on to find out how a special needs trust should be worded.

Statement of Intent

Perhaps the most important aspect of the wording of a special needs trust is stating that the purpose of the trust is to provide “supplemental and extra care” benefits that go beyond government-provided benefits.
It should also state that it is not supposed to function as a basic support trust.

References, Explanations, and Inclusions

The trust should reference the Social Security Operations Manual, and it should specifically reference the sections that authorize the creation of a special needs trust.
It should also explain the exception to the Omnibus Budget and Reconciliation Act, include the required language as pertaining to Medicaid payback, and include a copy of the relevant provisions from the United States Code.
It should not include an estate tax provision, also known as a “Crummey Clause.”

Should You Hire a Professional for Your Special Needs Trust?

Because of the specificity required to properly draft and establish a special needs trust, it is highly recommended that you seek the services of a professional when setting up your trust. Often, there may be complicated, state-specific rules to take into consideration, and a special needs trust expert will be on top of all the latest trust-related policies.

Turn to Alabama Family Trust!

Alabama Family Trust is your special needs trust expert in the state of Alabama! As a unique public service created by state law, we shelter and protect assets for persons with disabilities of all ages so that they may maintain eligibility or achieve eligibility for any government benefits that may be available to them. We also protect the person from financial exploitation or fraud.
Additionally, our trust documents have been pre-approved by Alabama Medicaid and are accepted by the Social Security Administration.
Contact us today for help setting up your special needs trust!

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Contact Alabama Family Trust via the contact link below to learn more about special needs trust funds.

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