As a general rule, most disability insurance policies do not allow a trust to be named as the beneficiary. This is certainly unfortunate, because it means that payment of proceeds is subject to the probate court if the insured dies, and may encourage guardianship to properly negotiate proceeds. It will be necessary to contact the insurance company to determine whether the policy can be funded.

If the insurance company will not allow the policy to designate the trust as the beneficiary, you should consider a Durable Special Power of Attorney to control the payment of proceeds in the event the insured is completely incapacitated or incompetent.

If a power of attorney is utilized, you should have your estate planning attorney send a copy of the power of attorney to the insurance company requesting that the insurance company acknowledge receipt and agree in writing that it will honor the power of attorney. Powers of attorney are typically submitted to an insurance company after the maker is incapacitated. Once incapacitated, there is little that can be done short of initiating a probate proceeding if the insurance company rejects or refuses to honor the power of attorney.