Families who have loved ones with disabilities require specialized planning and should consider a properly funded Special Needs Trust with life insurance as an effective way to address their unique and specific needs.
When dealing with a disabled child, the two most
important goals are to provide for the child’s needs
and simultaneously provide financial protection for
the assets that are set up to meet those needs. Basically, a trust is a
legal entity through which the legal ownership of
property is separated from the right to benefit from
the property. The legal title to property that is placed
in trust belongs to the trustee but the trustee is
legally obligated to use the trust property only for the
benefit of the trust’s beneficiary.
Life insurance is an ideal vehicle to fund a special needs trust. This is because the death proceeds become immediately available at the deaths of the parents. So the policy selected should
provide level premiums, increasing cash values and
contain provisions that will sustain the policy in
the face of the parents’ inability to pay premiums due to old age or disability. A whole life or universal life type policy can provide
increasing cash values to maintain the policy during
the parents’ old age and a waiver of premium
provision can cover the parent’s disability.
Daily life brings unique challenges and joys for families with special needs. Caring for disabled loved ones may leave little time for anything else, and creating a long-term strategy can seem like a daunting task. By creating a properly funded Special Needs Trust with life insurance, you can help your clients create a source of funds to provide essential care in an unexpected event.
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