Creating a Trust for a Special Needs Child
09/24/2013 06:38PM ● Published by Brian O
By: Mary Schilling, Agent, New York Life Insurance Company
If you’re a parent of a special needs child you’re probably well aware of how complicated and expensive it can be to make sure your child has the proper care. And often times this is a lifelong commitment. From housing, to healthcare, to even the most basic everyday needs—all these expenses add up. And while it may be tough to meet these obligations now, imagine how hard it would be without your income. That’s where a special needs trust can help.
If your child receives benefits from Supplemental Security Income (SSI) and Medicaid1 it’s important to remember that any income or assets in their name can affect their eligibility. A special needs trust may provide a way to protect those assets, making sure your child has the resources he or she may need without risking the loss of valuable government benefits. More importantly, if something happens to you, a special needs trust may help provide the necessary means for your loved one’s continued care, basic necessities, and additional expenses—even those that may not be federally subsidized, like specialized medical therapies, education, and transportation.
You will need to work with an attorney to create the trust. Once it’s been created, you can fund it in a variety of ways. In fact, you may want to explore the benefits of funding a special needs trust with a permanent whole life or universal life insurance policy. Both provide death benefit protection2, allow tax-deferred cash value accumulation, and can be made to suit your specific needs and budget. Your life insurance Agent can help you determine how much money you need in the trust, and discuss affordable options that are best for you.
If you provide care for a person with special needs or wish to create a substantial gift, a special needs trust can be of tremendous help. Plus, it’s one of the few estate-planning strategies that can protect your loved one’s eligibility for federal assistance.3 And, when funded by life insurance, a special needs trust may provide an affordable solution that can last for years to come.