Saundra M. Gumerove at the Advokids Blog has a great post on providing for your children if something should happen to you. I have taken the liberty of providing the entire post below.
When each of our children were born my husband and I started planning for their future, in particular the college fund. When we realized that Lauren would probably not be able to go to college and that she would need assistance for the rest of her life, we realized that we could not have any assets in her name or left to her in our will. This was during the 1980’s. We were stymied. It seemed very unfair that we would be unable to provide her with the extras she would need in the future.
Then, in 1993, Congress passed Section 13611 of the U.S. Omnibus Budget Reconciliation Act which changed the law to enable families to provide for a disabled family member. OBRA 1993, as the law is called, permits families, or any third party for that matter, to establish a trust called a special needs or supplemental needs trust. A parent, grandparent, sibling or any third party can put funds or other assets into a supplemental needs trust for the benefit of the disabled person. Although this discussion is geared to the special needs population, these trusts can also be used for any disabled person who is receiving government assistance regardless of the individual’s age.
Now we realized we could start planning and providing for Lauren’s future as well as that of her sisters without relying on anyone’s good will to care for her. Under the law, the goal of a supplemental needs trust, or SNT, is to enhance the quality of life of the beneficiary (the person who is on government benefits and will receive the benefits of the SNT). The SNT may receive property from life insurance, designated beneficiary acounts, other trusts, gifts and inheritances under the wills of third parties.
A trustee is named to administer the trust, that is, to invest the funds in the SNT and to use the funds to supplement any federal, state or other governmental benefits received by the beneficiary. The SNT, therefore, can provide the beneficiary with medical insurance, vacations, a computer, a television, etc. In other words, those items that government benefits do not provide.
When an SNT is established by a third party, the grantor, with assets that do not belong to the beneficiary, the grantor can designate who will receive any assets remaining after the death of the beneficiary. So, I can designate that any of my children who outlive Lauren upon Lauren’s death will receive a share of the assets remaining in her trust. SNT’s can also be established in a will.
The ability to create an SNT’s is a great relief to parents who can now plan for their disabled children as well as their “typical” children’s future.
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