Joe and Sally King, have an Adjusted Gross Estate of $10,000,000. They have a

disabled child, Susan, and two other children, Amy and Fred, who have no Special

Needs. Susan is currently receiving Medicaid benefits. They are creating an Irrevocable

Life Insurance Trust for the benefit of their children. Their Financial Planner told them

that if they owned life insurance in their own names, the face value would be subject to

Federal Estate Tax at their deaths. Their ILIT trustee will purchase a Survivor Life

policy that will be payable to a Special Needs Trust for Susan at their deaths, and also to

general needs trusts for their two other children. Which of the following statements

concerning this strategy is correct?

A. If Susans share of the life insurance proceeds are payable to a special needs

trust for her benefit, she will still qualify for Medicaid because the special

needs trust is not a countable resource.

B. If Susans share of the life insurance proceeds are payable to a special needs

trust for her benefit, she will not qualify for Medicaid because the special

needs trust is a countable resource.

C. If Fred and Amy are the only beneficiaries, Susan will still be disqualified

from Medicaid because the government will know that the Kings are trying to

get around the system.

D. None of the above statements are correct.