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.
This article is for general information and risk prevention only and should not be considered an offer of insurance or legal, financial, tax, or other expert advice. The recommendations herein may help reduce, but are not guaranteed to eliminate, any or all losses. The information herein may be subject to, and is not a substitute for, any laws or regulations that may apply. This information is current as of its publication date and is subject to change. Some of the services referenced herein are provided by third parties wholly independent of Federated. Federated provides access to these services with the understanding that neither Federated nor its employees provide legal or other expert advice. All products and services not available in all states. Qualified counsel should be sought with questions specific to your circumstances. All rights reserved.
¹ Social Security. Supplemental Security Income (SSI) Resources. https://www.ssa.gov/ssi/text-resources-ussi.htm. Accessed May 26, 2026.
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