In a recent Barron’s article, Collin Gimlin, a financial advisor at Prime Capital Financial, was featured for his knowledge of managing trusts and life insurance—a crucial area for families with disabled children. Here’s a breakdown of the key points discussed in the article.
Why Special-Needs Trusts Matter
Parents of special-needs children face a complex financial balancing act. They must plan for their retirement while ensuring their child’s well-being long after they are gone. A significant aspect of this planning involves setting up special-needs trusts, which can preserve eligibility for essential benefits like Supplemental Security Income (SSI) and Medicaid, which requires individuals to have less than $2,000 in assets. A trust can help provide additional money for things that the special-needs person might want or need, be it a cell phone, internet, travel, companion or other expenses.
Key Trust Types:
- Third-Party Trusts: These trusts are funded by someone other than the disabled individual, and the individual cannot access the funds, keeping them eligible for their other government benefits. Any remaining funds in these trusts can stay in the family—after the individual’s death they can be designated for other beneficiaries.
- First-Party Trusts: These trusts are generally used when the disabled individual has received funds outright (e.g., from a lawsuit or improper inheritance). These trusts are subject to Medicaid payback provisions, which means that, upon the disabled individual’s death, Medicaid may reclaim benefits paid before any remaining funds go to other beneficiaries.
Collin Gimlin’s Insights:
In his comments in the Barron’s article, Collin suggests leveraging life insurance policies to fund trusts for special-needs children. Leveraging insurance instead of their own money to fund trusts helps to provide parents’ liquidity, financial stability, and ability to save and pay for their own retirement. For younger parents, term life insurance might be a cost-effective option compared to permanent cash value life insurance policies like whole life, but each case is unique.
Key Takeaways:
- Liquid Assets: Collin emphasizes the importance of having liquid assets available to the parents and family, rather than all funds going to the special-needs child. Life insurance provides a straightforward solution to fund trusts effectively, allowing parents to allocate funds without compromising their own financial stability.
- Asset Distribution: Collin advises against overextending resources solely for the benefit of a special-needs child. Instead, he suggests considering the equitable distribution of property or less-liquid assets to other siblings, ensuring fairness and reducing potential family conflicts.
Summary
Collin Gimlin’s insights, featured in the article, underscore the importance of aligning with best practices in special-needs financial planning. His advice helps families navigate the complexities of trust management, balancing the needs of their special-needs children with their financial stability.
To explore these strategies in more detail, read the full Barron’s article. For personalized advice and assistance in your financial planning, contact Collin Gimlin directly at (417) 720-4255.
Source: https://www.barrons.com/articles/special-needs-children-benefits-trust-0e42672a
Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite#150, Overland Park, KS 66211. PCIA doing business as Prime Capital Financial | Wealth | Retirement | Wellness.
