Special Needs Planning: Points to Cover with Life Insurance Clients

special-needs-planningWhen preparing for the future of a family member with special needs, two broad economic objectives need to be accomplished. First, protect existing sources of income and medical resources, including those available through the government and also nonprofit needs-based programs. Second, create additional funding sources to help meet the individual’s needs, both during the caregivers’ lifetimes and after their death

Some of the specific questions caregivers of loved ones with special needs should objectively consider and answer:

  • What is the nature and extent of the individual’s disability and what is his or her prognosis? To what degree can he or she care for him or herself, both now and in the future? 
  • What are his or her educational and vocational goals?  
  • What is his or her current educational and/or employment status? Will it continue or might there be significant changes in the near future?  
  • What is the current financial status of the caregivers, the loved one with special needs, and other family members? Is there a possibility of an inheritance? From whom? Is that person involved in the planning process?  
  • Is there a possibility that the individual with special needs might receive a sum of money from a personal injury claim, a life insurance benefit, or any other source? If so, when? If so, have appropriate trust arrangements been made so that these assets are not owned directly by the individual? 
  • Does he or she qualify for government benefits? If so, is that need thought to be permanent? If not, for how long is the qualification expected to continue?  
  • Is there a specific income that is being targeted?   
  • What is his or her legal capacity? Is there a need for a guardianship either now or in the future? Until what age will the guardianship be needed?  
  • Does he or she need assistance with financial management? Can he or she handle finances in either large or small amounts?  
  • Will there be a need for additional funds to provide for his or her needs at the death or disability of the parents?   
  • At the death or disability of the parents, who can substitute for them? What if no family member is able to do so or later decides not to for whatever reason?  
  • Where will he or she live in case he or she is not able, or does not want, to live at home? In that case, what additional costs are involved and what will be the source of that funding? 
  • How will his or her financial needs following the death of the parents affect the shares of the estate available to other children? How will that be dealt with and communicated to those children?

Preparing for the future of families who have loved ones with special needs is an extremely complex undertaking, and we are living in an age of specialization. Consequently, families should take care to work with attorneys who have expertise not only in estate planning, but also in special needs law. For example, such attorneys can provide Special Needs Trust documents for the benefit of the individual with special needs that will help ensure that trust assets are to be used to provide supplemental and extra care over and above government benefits—not in place of government benefits—thereby preserving eligibility for government benefits.

See attached program from Prudential Financial for more information …

As an Illustration & Research Specialist for Brokers Central, Nicole Anderson assists brokers with product illustrations, proposals, research and information to support sales. View Nicole’s BioEmail Nicole.