There are several different mistakes that you can make when you are planning ahead for a loved one who has special needs. One of the most common of these is not properly maintaining and funding a plan.
When planning for any child with special needs, it is essential that appropriate assets be available for that individual throughout the course of his or her lifetime. This usually requires a liquid asset such as permanent life insurance.
This can be an ideal vehicle for this purpose especially if the parents of the child with special needs are healthy and young at the time they purchased the policy, which helps to keep the cost down. The parents may name the special needs trust as the beneficiary or the policy which could be set up through a revocable living trust or through the parents’ will.
However, in the event that the parent’s estate is large enough that estate taxes are a concern, they should also consider using an irrevocable life insurance trust or an ILIT to own the policy. Parents who want to set up an ILIT should always do so after consulting with an experienced estate planning attorney since this is a complex legal matter. A Pasadena estate planning lawyer can help you with this process.
