How Is A Special Needs Trust Typically Funded?
In many cases, a special needs trust is established, but not funded, while the parent or other creator is alive. Upon the parent’s death, his or her will transfers the disabled child’s portion of an inheritance to the trust. The trust (instead of the disabled child) can also be designated as the beneficiary of various assets, such as employee benefits and life insurance policies. Typically, it would include: life insurance, cash, investments, retirement plan benefits, personal and real property and proceeds from a personal injury settlement. Although life insurance is one of the most popular funding methods (in particular, lower-cost survivorship life insurance), each method has advantages and disadvantages. To ensure that the trust is adequately funded, you’ll need to estimate how much income your child is likely to need over the course of his or her lifetime. What Else Should You Consider? If you’re thinking about setting up a special needs trust, there are a few other points to cons
