FUNDING THE FUTURE
Using life insurance to pay for the long-term care of as loved one with special needs
If you have a minor or adult child or other family member with special needs, you know how
important it is to plan ahead for their long-term care. One component you may have already
considered is a “Special Needs Trust,” which can help ensure that your loved one’s quality of
life is maintained once you are gone. But funding a Special Needs Trust with enough money to
pay for the needs of a loved one requiring specialized care can be a daunting task. The costs of
providing a home and care, or possibly paying for a trained caregiver could easily exceed a
family financial resources. Funding a Special Needs Trust with a form of life insurance can
be one way to help accomplish this. For example, a parent can take out a life insurance policy
on his/her life so that once he/she is gone, monies will be available to help care for the child
with special needs.
Benefits of funding a Special Needs Trust with life insurance
Life insurance proceeds pass outside of the will and are generally estate tax free. See IRC
The policy can be designed to help fit your budget.
Life insurance payouts are typically processed quickly, which means the special needs
loved one can have the money when they need it.
There are various types of life insurance that can be used to fund a Special Needs Trust. The
type of policy you choose can depend greatly on the needs of your loved one and your
particular financial circumstances.
Caring for a loved one with special needs can be challenging. That’s why planning ahead is so important. Establishing a Special Needs Trust and a means of funding it now is an important
first step that will help ensure that in your absence, your loved one’s quality of life is preserved
and maintained. For more information on Special Needs Trusts, it’s important to consult with
an attorney in your state of residence who specializes in special needs estate planning.
0181965-00001-00, Ed 8/10/2010, Exp 12/24/2011
Provided courtesy of Prudential Financial Planning Services. For more information, contact Jeffery Palmer, Financial Planner, ChFC who offers investment advisory services through Prudential Financial Planning Services, a division of Pruco Securities, LLC. Jeffery Palmer’s private office is located in Asheville, NC. He can be reached at firstname.lastname@example.org and (828)687-8818.
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