Estate planning for business owners often focuses on succession, taxes, and fairness among heirs. But when a family member has disabilities, the process can become more complex.
Parents or guardians of children with disabilities often want to provide long-term financial support. However, leaving assets directly to these children can unintentionally disqualify them from government programs like Supplemental Security Income (SSI) and Medicaid, which have strict asset limits, usually around $2,000.1 For business owners, failing to plan can lead to unequal inheritances, family disputes, or financial instability.
Benefits of a Special Needs Trust
One strategy to plan ahead includes A Special Needs Trust (SNT). This can help by allowing families to:
- Set aside assets and ensure they are managed by a trustee according to a guardian’s wishes.
- Supplement government benefits for care, quality-of-life expenses, and long-term needs without affecting eligibility.
- Balance inheritances among children involved in the business, those who aren’t, and those needing lifelong support.
Life insurance can be an efficient way to fund an SNT. In addition, a Last Survivor policy for a child with disabilities can provide liquidity when needed, equalize inheritances, and ensure the trust is adequately funded without disrupting your business.
Talk to your Federated® marketing representative for a referral to a member of Federated’s network of independent attorneys to learn more or to discuss this in further detail, please contact your Federated regional representative.
