Irrevocable Life Insurance Trusts
Life insurance is a unique asset int hat it serves numerous diverse functions in a tax-favored environment.  Life insurance proceeds are received income-tax free and, if properly owned by an Irrevocable Life Insurance Trust (ILIT), life insurance proceeds can also be received free of estate tax.

An Irrevocable Life Insurance Trust is one of the most popular wealth planning devices. It is a trust designed to own a life insurance policy, usually on the lives of you and your spouse. You gift funds to the trust periodically and the trustee uses the funds to pay premiums on the life insurance policy. The trust is designed to produce benefits for your family:
• Make current gifts to family members.

• Accumulate assets outside the client's taxable estate.

• Protect assets from claims of creditors.

• Avoid income tax on the accumulation of funds.

• Avoid estate tax upon the distribution of funds to the family.

• Create a source of liquidity to cover estate taxes or expenses.

• Replace assets that may have been given to charity.

Special Needs Trusts
A Special Needs Trust is a trust that can supplement the needs of a special needs beneficiary while allowing the beneficiary to maintain his or her governmental benefits, including Supplemental Security Income (SSI), Social Security and Medicaid. With medical advancements, persons with disabilities are living longer and public benefits are often necessary, yet there is no guarantee that public benefits will provide adequate resources over the disabled person's lifetime, or that existing public agencies will continue to provide acceptable services and advocacy.

If the special needs trust is established by you or someone other than the disabled person and the disabled person does not have the legal right to demand trust assets, the trust is not considered a countable resource for purposes of government benefits. Therefore, the special needs trust beneficiary can continue to receive benefits even though he or she is a trust beneficiary. The trust will give the trustee the discretion to make distributions to the beneficiary to the extent possible without reducing benefits, and trust assets are available if the beneficiary no longer qualifies for governmental assistance or that assistance is no longer available.

If the trust is established on the beneficiary's behalf pursuant to a court order, for example as part of a personal injury settlement, the trust will not impact the beneficiary's eligibility. It may, however, need to include a payback provision that reimburses the state for its assistance before trust assets pass to the trust's other beneficiaries.

Common savings vehicles for children include Uniform Transfer to Minor Acts (UTMA) accounts, typical trusts, or designating a retirement plan, insurance policy or annuity directly to an SSI or Medicaid recipient. Use of these savings vehicles will cause a reduction or elimination of public benefits. Recognizing this, some parents make the difficult decision to disinherit their special needs children, but this severe action is unnecessary.