G.64 Planning for special needs and circumstances Flashcards
Learners will learn intricacies of planning for special needs and circumstances, including disability, long-term care, and estate considerations.
Jane is consulting with her estate planner to ensure that her estate will adequately provide for her son, Michael, who has special needs. Her estate planner discusses various estate planning tools that can ensure Michael’s long-term care and financial security without jeopardizing any government benefits he may receive. Which of the following options should Jane choose?
A. Irrevocable life insurance trust
B. Special needs trust
C. Joint tenancy
D. Tenancy in common
B. Special needs trust
A special needs trust is specifically designed to benefit individuals with disabilities by managing assets for their benefit without disqualifying them from receiving governmental assistance, such as Medicaid or Supplemental Security Income. This trust allows a trustee to provide for the supplementary needs of the beneficiary, beyond what the government programs offer, without risking the loss of those benefits.
G.64 Planning for special needs and circumstances
Maria is a mother of a child with special needs. She wants to ensure that her son will continue to receive proper care after she is no longer able to provide it herself. Maria is planning to meet with her financial advisor to discuss a document that will guide future caregivers and trustees about her desires for her son’s care, education, and daily life. Which document is most appropriate for Maria to discuss with her financial advisor?
A. A will to specify how her assets should be distributed upon her death
B. A living will to provide medical directives for her son
C. A letter of intent to provide instructions for the future care of her special needs son
D. A legal document to name a guardian for her son
C. A letter of intent to provide instructions for the future care of her special needs son
A letter of intent in special needs planning is used to provide a comprehensive guide that informs future caregivers and trustees about a parent’s or guardian’s wishes regarding the care, management, and expectations for a special needs individual. It covers aspects like education, daily care, medical needs, and personal preferences, ensuring continuity of care. This document is not legally binding but serves as an important informational resource to those who will care for the individual in the future.
G.64 Planning for special needs and circumstances
Margaret is a financial planner working with the Johnson family, who have a child with special needs. They are exploring various insurance options to ensure long-term financial security and care for their child. Considering the child’s lifelong dependency, which of the following types of insurance should Margaret recommend?
A. Whole life insurance
B. Term life insurance
C. Disability insurance
D. All of the above
D. All of the above
Whole life insurance would provide lifelong coverage and a cash value component, which can be beneficial for a special needs trust. Term life insurance could provide coverage during critical periods, such as while parents are still providing financial support. Disability insurance is crucial as it covers the individual in case of disabilities that could impact their ability to earn an income. Thus, all these options may be appropriate, depending on the specific needs and circumstances of the family.
G.64 Planning for special needs and circumstances
What is the main purpose of a trust protector in a special needs trust?
A. To manage the assets of the trust
B. To make decisions regarding the special needs individual’s care
C. To ensure that the trustee is fulfilling their duties properly
D. To terminate the trust if it is no longer needed
C. To ensure that the trustee is fulfilling their duties properly
G.64 Planning for special needs and circumstances
Which of the following may be used to provide for the care of a special needs individual after the death of their primary caregiver?
A. Guardianship
B. Conservatorship
C. Special needs trust
D. Joint tenancy
C. Special Needs Trust
G.64 Planning for special needs and circumstances
Which of the following is an example of a government benefit that may be available to a special needs individual?
A. Medicaid
B. Social Security Disability Insurance
C. Supplemental Security Income
D. All of the above
D. All of the above
G.64 Planning for special needs and circumstances
Which of the following is a potential risk associated with leaving assets to a special needs individual directly?
A. The assets may be used up quickly
B. The special needs individual may lose eligibility for government benefits
C. The special needs individual may not have the capacity to manage the assets
D. All of the above
D. All of the above
G.64 Planning for special needs and circumstances
Which of the following is a potential benefit of a pooled special needs trust?
A. Lower administrative costs
B. Increased control over assets
C. Ability to make direct distributions to the special needs individual
D. None of the above
A. Lower administrative costs
G.64 Planning for special needs and circumstances
Which of the following is a potential disadvantage of a special needs trust?
A. Limited flexibility in managing assets
B. High administrative costs
C. Increased tax liability
D. None of the above
A. Limited flexibility in managing assets
G.64 Planning for special needs and circumstances
Which of the following may be considered in determining the appropriate amount of life insurance for a special needs individual?
A. The individual’s current income
B. The cost of ongoing medical care
C. The estimated cost of future care
D. All of the above
D. All of the above
G.64 Planning for special needs and circumstances
John has a daughter with Down Syndrome who is currently receiving government benefits. He wants to provide for her financially after his death. Which of the following estate planning tools would be appropriate for John?
A. Joint tenancy
B. A will leaving assets to his daughter directly
C. A special needs trust
D. None of the above
C. A special needs trust
G.64 Planning for special needs and circumstances
Susan is the caregiver for her adult son who has autism. She wants to ensure that he will be taken care of after her death. Which of the following documents should Susan consider creating?
A. A letter of intent
B. A durable power of attorney
C. A living will
D. All of the above
A. A letter of intent
G.64 Planning for special needs and circumstances
Mark wants to provide for his special needs sister by leaving her a portion of his estate. What is a potential disadvantage of leaving assets to his sister directly?
A. She may not have the capacity to manage the assets
B. The assets may be used up quickly
C. She may lose eligibility for government benefits
D. All of the above
D. All of the above
G.64 Planning for special needs and circumstances
Lisa is the trustee of a special needs trust for her brother who has cerebral palsy. What is the role of a trust protector in this situation?
A. To manage the assets of the trust
B. To make decisions regarding the brother’s care
C. To ensure that Lisa is fulfilling her duties properly
D. To terminate the trust if it is no longer needed
C. To ensure that Lisa is fulfilling her duties properly
G.64 Planning for special needs and circumstances
Tom wants to provide for his special needs daughter by purchasing life insurance. What is a potential benefit of using whole life insurance?
A. Lower premiums than term life insurance
B. Cash value accumulation
C. Greater flexibility in managing the policy
D. None of the above
B. Cash value accumulation
G.64 Planning for special needs and circumstances
