Can a special needs trust receive life insurance?

Question

At the moment, I have a trust in my estate plan and am considering naming it on one or more life insurance policies. At the moment, the trust may be for children or a beneficiary with special needs. For context, the coverage could affect roughly $45,000 or more for my family, so I am paying close attention to exclusions, beneficiary rules, and what could cause the benefit to be reduced.

Soradin · Accepted Answer

A properly designed trust may preserve management and reduce the risk of disrupting means tested benefits. For this insurance planning decision, a trust can be named as life insurance beneficiary to control management, protect minors, coordinate taxes, or provide for special circumstances. When evaluating the policy, the trust language, policy form, ownership, and tax goals must be aligned. Do not treat the beneficiary form as separate from the estate plan, since the insurer generally follows the beneficiary designation it has on record.

Can a special needs trust receive life insurance?

Soradin

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