By some estimates, there are over 2,000,000 children between the ages of 5 and 15 in this country with a disability.  In fact, approximately 30% of that group, or more than 600,000 people, have two or more disabilities.

Parents of special needs children need to seriously think about doing long range planning and consulting with an experienced estate planning attorney when preparing their estate plan including their living trust.

Life insurance is certainly something that an estate planning attorney can and should discuss with the parents of a special needs child.  The reason that parents want to discuss with an estate planning attorney is that life insurance proceeds can theoretically disqualify an individual from federal assistance.  Inheritances can affect eligibility for programs offered by the state of California. Moreover, an inheritance of greater than  $2,000 can disqualify a recipient from federal assistance including Supplemental Social Security (SSI) for up to three years.

 In the event a special needs trust is correctly set up for the special needs beneficiary, the beneficiary remains eligible for assistance.  In this way the trust can be utilized to pay for things such as rehabilitation, entertainment, trips, home health aides, etc.

Used correctly, life insurance may be a great source of funding a special needs trust.  Parents should consider term life, whole life, and second-to-die.  Each has its advantages and disadvantages when used in this context.

For  more information, contact an estate planning attorney who has experience in this area and understands how to create a special needs trust within a living trust.