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AARP Bulletin

Financially Speaking

Providing for a Relative With a Serious Illness

Special estate planning is needed for loved ones with special needs

As for insurance, caregivers need a "permanent" policy that covers them for life. Whole-life coverage is a good choice — its premiums and benefits are guaranteed. Universal-life policies permit a variety of payment schedules that might or might not be enough to fund the policy in later years.

Please, don't let a special-needs planner or adviser at a financial services company talk you into buying more insurance than you need. (You might be shown a "financial plan" that is nothing more than a sales document.) Your policy should fund only the "extras" that you want the trust to pay.

Useful resources

If you're leaving a modest amount of money, consider trusts offered by nonprofit organizations for people with disabilities, such as The Arc or the National Plan Alliance. The organizations manage the trust and work with the family on a general plan of care, says Marty Ford, The Arc's head of public policy. For larger sums, check the Special Needs Alliance for a lawyer who has experience with these trusts.

For a spouse with a disabling disease, you also need a care plan, including insurance in case you die first. Check the National Academy of Elder Law Attorneys. Ask for a lawyer who can tell you if your spouse qualifies for Medicaid's nursing home coverage. Pay special attention to your spouse's health care proxy and living will, says Martin Shenkman, an attorney in Paramus, N.J. The care you want early in the disease might differ from what you want later. Your spouse should control personal medical and financial decisions as long as possible, he says. Sign forms while your spouse still can.

Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW. She writes regularly for the Bulletin.

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