This form is a trust used to provide supplemental support for a disabled beneficiary without loss of government benefits. It may be revocable or irrevocable, as the funds are contributed by a third party, and not the beneficiary. The Omnibus Budget Reconciliation Act of 1993 established the supplemental needs trusts.
A supplemental needs trust (SET) sample with life insurance is a specialized financial instrument designed to provide financial security and support for individuals with disabilities or special needs. This type of trust aims to preserve the beneficiary's eligibility for means-tested government benefits, such as Medicaid or Supplemental Security Income (SSI), while supplementing their care and quality of life. There are primarily two types of Supplemental needs trust samples with life insurance: 1. Third-Party Supplemental Needs Trust: This type of trust is typically established by a family member or a third party with the intent to support the individual with special needs. The trust funds can be contributed by parents, grandparents, siblings, or any other loved one who wants to ensure the long-term financial security of the beneficiary. Life insurance policies are often used as a funding source for the trust, ensuring a substantial financial cushion upon the death of the insured party. 2. First-Party or Self-Settled Supplemental Needs Trust: This trust is created using the assets owned by the person with disabilities. First-party Sets are primarily used when an individual with special needs receives a substantial amount of money, such as an inheritance, personal injury settlement, or a large insurance payout. In this case, the life insurance policy can be owned by the individual with special needs, and the trust would be established to receive the death benefit proceeds. This type of trust, however, comes with specific legal requirements, as it must contain a Medicaid payback provision, meaning any funds left in the trust upon the beneficiary's passing will reimburse Medicaid for the assistance provided. In both cases, a Supplemental needs trust sample with life insurance helps to ensure that the individual with special needs can maintain a higher quality of life by supplementing government benefits. The trust's primary function is to provide additional financial resources that can be used for a variety of purposes, including education, medical expenses, accessible housing, transportation, therapy, and recreational activities that enhance the beneficiary's overall well-being. By incorporating life insurance into the trust, it allows for an infusion of funds upon the death of the insured party, assuring the continuity of financial support for the individual with special needs. Additionally, the life insurance policy can provide peace of mind for the family or third-party involved, knowing that even if they are no longer there to offer care or financial assistance, the trust will continue to support their loved one. In conclusion, a supplemental needs trust sample with life insurance is a crucial estate planning tool that helps secure the financial future of individuals with special needs. It allows for the preservation of means-tested government benefits while providing extra funds to enhance the beneficiary's quality of life. The specific type of trust, whether third-party or first-party, depends on the source of the trust assets. Incorporating life insurance ensures a substantial financial infusion, offering long-term support and peace of mind for the beneficiary and their family or loved ones.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
