Families with a special needs child often lack an appropriate financial strategy. Only 38% have a plan in place to help cover the cost of care for their child, and only 16% of those who actually have a plan consulted with a financial advisor.
Without proper guidance, families often plan inappropriately, using tactics that could jeopardize crucial government benefits.
Help your clients avoid costly mistakes
Mistakes are costly, yet are made all too often:
• Naming a special needs child as a direct beneficiary or gift recipient may disqualify them from some government benefits.
Yet, 50% of parents surveyed plan to leave money directly to their special needs child as a beneficiary in their will.
• Directing a special needs child’s inheritance to another family member to administer can be risky if the intermediary “owner” is subject to bankruptcy or litigation, or predeceases the special needs child.
Yet, 57% of surveyed parents intend to leave money to someone other than their special needs child with the “understanding” that the money will be used for the well being of their child.
Avoid planning pitfalls with a Special Needs Trust
A Special Needs Trust is an effective way to help provide security and quality of life for an individual with special needs. This type of trust holds and distributes assets in a manner that protects a special needs beneficiary’s eligibility for government food, clothing and shelter benefits.
Life insurance in a Special Needs Trust
Purchasing a life insurance policy within the trust may offer tax-advantages and provide additional value through the death benefits proceeds.
Who may benefit from this strategy?
Consider clients who:
• Are age 30-65
• Have a child with special needs
• Want to provide for the welfare, comfort and development of the child
• Want to preserve government-sponsored benefits
• Plan to fund a long-term strategy during their lifetime
• Would be interested in a tax-advantaged way to help fund their plan
• Know that at least a portion of assets placed into a Special Needs Trust will not be needed by the child during the parents’ lifetime
Talk to your clients today
Establishing an effective long-term strategy helps to ensure that your client’s best intentions are in their child’s best interest.
As a financial professional, you have an important role to help:
• Educate clients about the need for planning ahead
• Introduce Special Needs Trusts as a way to avoid jeopardizing government-sponsored benefits
• Ensure an effective strategy for each individual family’s circumstances