Worried about what will happen to your child if you're no longer here?

• A trust may give you more control over where assets go after you die, how they can be used, and when, than you might have if the assets were distributed pursuant to a will.
• A will is usually probated public, the legal process in which the state rules on a will's validity. A trust can help avoid the time, costs, and uncertainties of probate.
• You can't leave assets to an underage child without naming a property guardian or a custodian under the Uniform Transfers to Minors Act (UTMA), but you can leave assets to a trust set up to benefit a minor.
• And significantly, holding assets in a trust may help the child qualify for government benefits.

Transferring assets to a child with special needs is inherently problematic, even if they can function at a high enough level to live independently. If the child holds substantial assets in their name – such as the proceeds of a life policy – it can complicate the process of qualifying for Medicaid or other federal and state assistance programs. A properly designed trust can help avoid that problem because assets aren't in the child's name: the trust holds and controls the assets, which are then used to pay for the child's care according to your specific instructions.

Some parents choose to leave insurance proceeds and other assets to an alternate caretaker (such as a sibling or other family members), trusting that they will use the funds appropriately. However, there's a significant risk involved: once the money is in the caretaker's name, it's legally theirs to use in any way they see fit. Even if a caretaker is loving and well-intentioned, they may not be a good money manager: funds could be used unwisely and run out prematurely. On the other hand, a trust lets you set out very specific conditions for how and when assets may be used caring for the child, and those instructions must be followed after you're gone.

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In such cases, parents are often left with considerable debts to go along with their grief. There are medical costs. Caretaker expenses. And too often, wages and career opportunities are lost due to months or years of absence from the workforce. Life insurance can help lessen the burden.

While children's whole life policies are available, they generally may not be sufficient. Coverage amounts are typically modest, and rates are often high, even compared to a similar typical adult policy. Also, many special needs children may not qualify. If you have or are getting your own policy, another option is to take advantage of a child coverage rider if available from your life insurance company. While coverage amounts are also modest, rates are generally affordable. Some policies may also give the option of conversion to whole coverage later on, for example, when your child turns 25.

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Once a child reaches age 18, benefits eligibility changes. They may qualify for supplemental security income benefits (SSI) based on their own income and assets (as opposed to their parent's income and assets). In order to receive benefits, the child must meet the Social Security Administration's disability standard, have less than $2,000 in assets, and receive minimal income – and that is one reason why many parents choose to set us a special needs trust to hold assets for their child out of that child's name.

Life insurance can be a powerful financial tool to help protect your child and your family. But as a parent of a child with special needs, your situation and needs are more complex than most. Professional guidance and estate planning can help you arrive at the right solution for your needs. Discuss your situation with our agents and financial professionals that have the experience helping families with special needs children. Let us take one less worry away and give your family a peace of mind.