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Posted by Patty Manko on Thu, May 02, 2013 @ 04:48 PM

Money MagazineJohn Nadworny’s Financial Plan for a Family with Special Needs

Featured in Money Magazine

Over the many years, in our presentations about financial planning for families of people with special needs, we always referred to ourselves as NOT the typical  Money magazine family. Times have changed.

Last fall John received a telephone call from Jeff Howe, who was writing an article about financial concerns of families with a child with special needs.  Jeff’s interest extended beyond the story he had been hired to report- his 5 year old son Finn is diagnosed with autism and other significant medical conditions.  Like many others in his situation, Jeff and his wife Alysia were distressed and completely overwhelmed with trying to figure out what it would cost to raise their son and take care of the rest of the family. 

 According to the US Census bureau, nearly 1 in 5 people in the US have a disability, with half of them reporting the disability to be severe. ¹ About 1 in 88 children has been identified with an autism spectrum disorder.²   Given the vast number of families dealing with providing and planning for their loved one with a disability, there are a number of financial planners claiming expertise in special needs. Jeff interviewed and moved beyond several of them before finding John through an online search. Finally, he had called the right person.

 John Nadworny was familiar with scary math: his youngest child James was turning 22, the age at which school districts relinquish responsibility for a special needs child.  James has Down syndrome and John and his family planned and prepared for years to provide James with the means to have an independent and full life. To read about the Nadwornys’ experience planning for their son’s transition to independent living, click here: Diary of a Dream.

John applied his 20 years of experience in financial planning and knowledge of the costs  of a child with a disability and walked the Howe family through a process to help them reach their goals. The result is Paying for Finn: a special needs child, Money, May 2013.

Click the link below to read the full story. 


 ¹Americans with disabilities 2010

² CDC Autism and Developmental Disabilities


Tags: Special Needs Financial Planning, autism, financial planning

Financial Factors in Special Needs Planning

Posted by Patricia Manko on Thu, Feb 28, 2013 @ 03:09 PM

financial factors Starting at a very young age we are taught about the value of money. Throughout our lives we associate the value of money to our life experiences such as paying for our own college education, purchasing a car, buying a house, saving for our own children’s college and our ultimate retirement – in addition to the daily expenses of our desired lifestyle.

Your Family's Financial Values or Standards

It is important to talk about the value of money and what it means to you because you can pass these values on to future caretakers and other family members. How you feel about money can also have an impact upon what you can achieve for your child's future. It does not do any good if you do not share your values of money with others. If parents do not articulate their vision, their financial capacity to achieve their goals and their financial intentions, their vision for their child may not happen. It is important to express your values to your financial advisors, trustees, guardians, and legal advisors, but also to your other family members. These individuals most likely will be the ones to follow through on implementing the plan that you have for your child.


Take a moment to ask yourself – What does money mean to me? Then take time to share those values with your family –this can be expressed in your Letter of Intent.

 Download a template for your Letter of Intent

Bringing Family Members into Your Discussions

There are many ways to discuss your vision and your finances. It is often easiest to begin this process in a gradual manner and in an informal environment. Although it is important to have all family members in agreement, scheduling initial discussions in a formal meeting or large family setting is not always the best. We recommend speaking to one child at a time, to get their feelings about their willingness to help. This will give them the opportunity ti share ideas with you rather than you telling them what you hope will happen. Remember, caring for a family member with disabilities is a lifetime commitment that you do not want to force on anyone, yet it is important for them to know your intentions.

After everyone has had an opportunity ti discuss tghuer feelings and ideas un and informal way, you may wish to plan a discussion wuth everyone at once.  Since every family’s dynamics are unique, you will find the best way to communicate with your family. The following steps should help to move the communication process along smoothly:

  • Share your vision
  • Talk about the amount of money you plan to have available to support your vision. You do not have to reveal all of your financial matters. You can choose to only mention the financial aspects that pertain to the needs of the family member with a disability.
  • Determine the best person to take on each role. For example, who is the best with finances? That person may be a good trustee or trust advisor of a Special Needs Trust. Who is most involved in the day to day life of the child? That person may be a good guardian.
  • Ask family members if they feel able to perform their roles independently. If not,design your plan to give them resources to work with. For example, let them know that they could hire an investment advisor to help with the trust management or a social worker to help oversee supports.

In our combined 30-plus years of planning, one of the biggest obstacles that we have encountered is that people do not feel comfortable talking about how much money they have. Even professionals in the field of providing services to families, including government agency employees that serve families, do not feel comfortable talking about money or the specific costs of providing services to individuals with disabilities. 


Although Charles is receiving all the benefits that he is eligible for and living independently, we feel that it is not enough for him to simply have what the government provides. We supplement his expenses by about $1,000 a month. This gives him the sense of self-worth and control to be able to do what he likes rather than do what someone else wants him to do. He has schizophrenia and his sense of self-worth is most important to his ability to function in life. In working with our financial planner and our attorney, we made arrangements for our other son to provide this supplement to support Charles’ needs without jeopardizing his government benefits when we are no longer able to. 

-- Charles’ father

Sometimes parents feel that they must treat all of their children equally. They feel that their children expect it. However, in many cases children without disabilities are more than willing to forego any type of inheritance to guarantee security for their brother or sister with  a disability. They understand the financial realities and would rather make sure their brother or sister is taken care of and would not expect that everything is shared equally.

One of the first steps that is required for you to be able to achieve financial security for your child is to overcome the reluctance to discuss the issues of money. We all know it takes money to provide services, staff, housing expenses, employment supports, transportation, education, health care services and the like. We also know that the government does not have an endless supply of money to funed these services.

Maximize Eligibility for Government Benefits

With this in mind, families should plan to maximize eligibility for governmenaboutof what funds are available to your family member– both personally and publicly –how to secure them and how to allocate them. We will be posting a blog about public resources, which we call government factors,  within the next few weeks.

Understand Where You Are and Where You Would Like to Be

In order to maximize your own personal resources, you must first understand where you are financially. Do you have the money to do the things you and your family like to do today? Are you happy where you are financially? If not, what can you do to change things?

The next step is to know where you want to be. What lifestyle do you envision for you and your family, today and in the future? What do you consider retirement – is it when you stop working full time, when you stop working the hours that you currently work, or when you begin to work part time or pursue a hobby for income?  What do you want to do for your vacations, travel time, fun time, and the like?  How philanthropic do you want to be? Where do you envision living when you retire?  In what type of environment do you envision your child living ?  Do you envision him or her living totally independent from you or do you intend to always be involved in the daily activities of your child's life for as long as you are able to?

Create a Plan

The next step is to prepare an action plan to get you where you want to be financially. This is where having qualified advisors to guide you through the planning process can be most beneficial.

The key issue to consider in the financial factors is maximizing personal resources. This includes maximizing tax planning strategies – both income tax and estate tax planning. The proper use of financial products can also be a key factor to financial success. You should also incorporate your group employee benefits in the planning process.  These would include your group health, life and disability insurance coverage,retirement plans, stock option plans, stock purchase plans, flexible spending plans, etc..  Determine those that are currently available to you and your family as well as those available to your family upon your death and /or retirement.  You should also determine which employee benefits are transferable and/or portable upon  termination of your employment.  Adequately protecting your income and assets in the event of a premature death and/or disability of a parent is critical.

Any type of planning process, from planning a vacation to building a house, has a defined beginning and ending point. The traditional financial planning process involves identifying resources and listing specific goals that can be quantified. Some common examples of quantifiable goals might include paying cash for your next automobile, saving for four years of college tuition payments ,purchasing a second home for retirement, or generating a retirement income equal to 65%-75% of your pre-retirement income.

Planning for a family member with disabilities can be a much more challenging process. There is no defined beginning or ending point. Needs and abilities of the individual can change rapidly and will vary significantly over time. It is only natural for the family of a young child to want to have a concrete plan in place that provides adequate assets and resources for their child’s lifetime needs. Families must realize, however, that it may not be possible to predict accurately the long-term costs involved in providing supports for an individual over his/her lifetime.

Assumptions can be made of future expenses. We can fairly accurately determine the costs of a physical residence – a house or a condo – in a geographic area based on current market values. We can also estimate the costs of maintaining the physical residence. Often, however, we cannot always accurately determine the costs of supports until the needs are identified. Once the needs are somewhat identified, we can develop a range of the probable expenses necessary to provide these supports today and in the future. Before implementing a residential plan it is highly recommended that you work with an independent consultant to determine the level of supports required. You then need to develop a model that meets both your personal preferences and your financial abilities to maintain the model, both during your lifetime and upon your death.

So how do we determine how much money is needed? And how much is too much? Just as the educational needs of every child are unique, so are the long-term planning needs of every individual with special needs. Even two individuals with a similar medical and/or cognitive diagnosis, can have significantly different support requirements. With these varying requirements, costs will also vary. There is no clear answer; the bestwe can do is to maximize all resources and coordinate all of the Five Factors.That is why it is so important to have a comprehensive plan and to reevaluate it periodically.

Tags: Special Needs Financial Planning, Retirement Planning, Special Needs Trusts, five factors of financial planning, Letter of Intent, Trustee Services, guardianship, financial planning, wealth management, special needs Letter of Intent

Putting Your Family's Special Needs Planning Team Together

Posted by Patricia Manko on Thu, Feb 07, 2013 @ 04:47 PM

expert advice special needsWhen a family member has special needs, whether with autism, Down Syndrome, Asperger's Syndrome, schizophrenia, developmental disabilities, mental illness or any other disability, it is never too early to begin planning for their future. Keep in mind that Special Needs Planning is planning for Two Generations.

It's so important to work with advisors who can help you to think about the vision you have for your child and begin to build a plan that will support them both during your lifetime and well after you are gone. Building your family's special needs planning team of experts should include a financial planner, estate planning attorney and accountant. If possible it should include conversations with current and/or future trustees, guardians, caretakers, and any other person involved in your child's life.

Since we believe that finding the right people for your team is so important, we have dedicated this issue to providing tips on how to select a financial planner and how to locate a qualified disability law attorney.

A qualified disability law attorney can be found via two resources that we use in referring clients throughout the country. One is the Special Needs Alliance, a national, non-profit organization committed to helping individuals with disabilities, their families, and the professionals who represent them. Another is Special Needs Answers which is a community service provided by the Academy of Special Needs Planners.

Below you will find a Checklist for Finding a Financial Planner, a tool for interviewing. The answers can help you determine who is the right person for your team of experts.

ou must take care to choose a financial planner and an attorney who is qualified and knowledgeable in disability law to assist you. There are several organizations that are devoted to regulating the qualifications of financial planners and investment advisors. The Certified Financial Planner Board of Standards, Inc. (CFP Board) is the professional regulatory organization acting in the public interest to foster professional standards in personal financial planning. We recommend that you work with a CFP® practitioner for your financial planning needs who is knowledgeable in special needs planning.

To assist in your search for a knowledgeable advisor, we have prepared a Checklist for Interviewing a Financial Planner.

Click here to access Checklist for Interviewing  a Financial Advisor

Tags: Special Needs Financial Planning, financial planning

Using the Letter of Intent to Plan for Your Child's Future Today

Posted by Patricia Manko on Thu, Jan 17, 2013 @ 02:16 PM

Click here to view and print our January 2013 Newsletter featuring:

  • Financing Your Vision for your Child: Using the Letter of Intent to Plan for the Future Today
  • Housing Checklist
  • Presentation information
describe the image
To download a sample letter of intent, click here.

Tags: Special Needs Financial Planning, Special Needs Trusts, Letter of Intent, financial planning, special needs Letter of Intent

Financial Records: What to Keep & What to Toss Away

Posted by Patricia Manko on Wed, Nov 14, 2012 @ 05:59 PM

financial records resized 600There are many reasons to keep records.  In addition to tax purposes, you may need to keep records for insurance purposes or for getting a loan.  Good records will help you:

  • Identify sources of income—to separate business from non-business income & taxable from nontaxable income
  • Keep track of expenses—to see if you can claim a deduction
  • Keep track of the basis of real estate property– you need to keep records that show basis of your property
  • Prepare tax returns—good records help you to file quickly and accurately
  • Support items reported on tax returns—you must keep records in case the IRS has a question about an item on your return

 For a checklist to guide you on the disposition of your financial records, click here to read our whitepaper.

Tags: financial planning

20 Tips for Minimizing YourTaxes in 2012 & Beyond

Posted by Patricia Manko on Thu, Aug 02, 2012 @ 03:44 PM

tax cut resized 600Will the Bush-era tax cuts expire next year? We may not have an answer to that question for several months. After the November elections, you could see them extended once again. Nothing is certain: with the daunting financing challenges the federal government faces, they may finally expire in 2013.

 If your goal is tax minimization, here are 20 “to-dos” you might want to accomplish before 2013 arrives; alone or in combination, they could save you some money. Just one note beforehand: consult the tax or financial professional you trust before you make these moves, so you can see how they fit within your overall financial picture.

 1) Sell some stocks or funds before 2013 arrives. If you sell highly appreciated investments that you have held for at least a year during 2012, you can exploit the current 0-15% capital gains rates. In 2013, all but those in the 15% income tax bracket will face 20% capital gains taxes. On top of that, a potential 3.8% Medicare surtax could be levied on certain net investment income for individuals with MAGI of $200,000+ and married couples with MAGI of $250,000+. Just think: you could use your tax savings for tuition, mortgage payments or other priorities.1,2

 2) Think about taking some profits while 2012 is still here. The current 15% tax rate for qualified dividends could disappear in 2013. If the EGTRRA/JGTRRA cuts aren’t extended again, these dividends will be taxed as ordinary income next year (the maximum tax rate on them will jump to 39.6%).1

 3) Retired & wealthy? Consider withdrawing more from your IRA. Are you in the top tax bracket? You might end up paying as much as 43.4% in income taxes to Uncle Sam next year (projected 39.6% top tax rate + possible 3.8% Medicare surtax). This is assuming the EGTRRA/JGTRRA cuts expire in 2013 – and with the federal deficit and Social Security’s revenue issues, they may. The top tax rate for 2012 is just 35%, so if a sunset for the Bush-era tax cuts looks pretty certain, it may be worthwhile to withdraw some IRA assets in late 2012 for 2013 needs.2

 4) Consider going Roth. If tax brackets reset to 2001 levels and stay there for years to come, then converting a traditional IRA to a Roth IRA may be a really smart move (future tax-free withdrawals of earnings, assets passing tax-free to heirs).2

 5) Think about exploiting the current $5.12 million lifetime gift tax exemption. A 2010 law reset the lifetime federal gift, estate and GST tax exemptions at $5,120,000 through the end of 2012 and made the exemption portable between married spouses. This means a) you currently have the ability to gift up to $4.12 million more than the old $1 million lifetime limit and b) married couples can currently gift up to $10.24 million. This gives you an amazing opportunity to reduce the size of your taxable estate. On January 1, 2013 (barring Congressional action), the lifetime unified gift/estate/GST exemption will reset to $1 million and portability will be lost.3

 6) Consider a donation of appreciated stock to charity. Instead of a cash gift, you could do this and get 1) a charitable deduction for the full market value of donated shares and 2) a way to avoid tax on the unrealized gains of the security. The investors who can get the most out of this are those who itemize deductions and fall into the 15% tax bracket or higher. A reminder: you have to have owned the shares for at least a year. (Speaking of itemized deductions, take a look at #18 below.)4

 7) Arrange tuition payments to take advantage of the AOTC. The American Opportunity Tax Credit is set to expire in 2013. So it might be worth it to pay 2013 tuition during 2012, as the AOTC provides up to $2,500 in tax credits on the first $4,000 of qualifying educational expenses. Even better, 40% of the credit (up to $1,000) is refundable – you will get that portion back even if you owe no taxes for 2012. Generally speaking, a single filer with MAGI of $80,000 or less or joint filers with MAGI of $160,000 or less can claim the AOTC for the qualified expenses of an eligible student. Phase-outs kick in at those levels; single filers with MAGI above $90,000 and joint filers with MAGI above $180,000 cannot claim the credit for 2012.5

 8) A huge tax credit is available in 2012 for adoptive parents. The federal adoption tax credit is up in the air for 2013; it may be renewed or made permanent, but such a move might come at the eleventh hour. For 2012, the adoption tax credit is $12,650. It isn’t refundable (so if your total tax bill is less than the credit, you won’t get additional money back from the IRS). It can be carried forward for up to five years – if you don’t end up using 100% of the credit for the 2012 tax year, you can use the remainder to offset some federal income taxes through 2017.6

 9) 50% business expensing is scheduled to be eliminated in 2012. The bonus depreciation limit that benefited large companies (50% for 2012) will be gone if the Bush-era tax cuts sunset. So next year, big businesses could lose a chance to take a 50% write-off on new capital equipment.7

 10) Section 179 limits could really drop in 2013. In 2012, the maximum Section 179 deduction allowance is $139,000. For 2013, it is slated to return to $25,000. The limit on capital purchases - $560,000 in 2012 – is scheduled to fall back to $200,000 in 2013.7

 11) You may want to roll over assets from a Coverdell ESA into a 529 plan. Should the Bush-era tax cuts expire, Coverdells will also be hit hard: the annual contribution limit for any one beneficiary will drop to $500 from $2,000, only college-related expenses will be considered “qualified spending”, and contributions to a Coverdell and a 529 plan will no longer be allowed in the same year (among other drawbacks). If the Bush-era cuts are extended for the middle class, Coverdell ESA benefits may not be so impacted – but no one knows at this point.8

 12) Before 2013 arrives, you might want to exercise some stock options. As the prospect of higher taxes looms, it may be a good time to weigh taxable hedging strategies and make 83(b) elections on restricted securities.

13) Think about municipal bonds. The potential tax hikes of 2013 have made them more attractive, as the interest on these securities is tax-exempt. Their yields might presently increase, as President Obama has talked of restricting the tax break on muni bond interest at 29% for single filers earning more than $200,000 and couples earning more than $250,000.9

 14) Take another look at REITs. Some publicly traded REITs have shown positive returns; if dividends are taxed as ordinary income starting in 2013, then investments paying dividends and taxable interest may be at par with each other.

 15) Cash value insurance might prove handy. It may be worth it to run the numbers here: a whole life policy could be a nice source of funds if the projected tax savings will outweigh the policy costs.

 16) An MLP might prove to be a useful business structure. Typically, around 80-90% of the distributions from a Master Limited Partnership (MLP) are tax-deferred and characterized as return of capital, reducing cost basis for the individual investor.10

 17) You may want to have that dental work or elective surgery done in 2012. Next year, you will only be able to deduct the medical expenses exceeding 10% of your AGI. For 2012, you can deduct medical expenses when they surpass 7.5% of your AGI.9

 18) Alert: phase-outs on itemized deductions may return in 2013. The phase-out on the personal exemption is also slated to come back. So it may be smart for higher-income families to fulfill pledges made to 501(c)(3) non-profits in 2012.1

 19) Pay attention to asset location. You may want to move income-producing assets into tax-deferred accounts or shift assets that generate capital gains into taxable accounts. Doing this may give you opportunities to defer those gains and practice tax-loss harvesting.

 20) Lastly, beware portfolio churn. The reality is that some funds make frequent trades. These trades result in taxable gains (including short-term gains, which are taxed severely). Getting out of certain funds may save you some tax dollars.


This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 - www.advisorone.com/2012/03/08/14-big-changes-for-tax-years-2011-13-tax-expert-be [3/8/12]
2 - articles.chicagotribune.com/2012-03-23/business/sc-cons-0322-marksjarvis-20120323_1_tax-credit-tax-return-big-tax-refund  [3/23/12]
3 - www.ppglc.com/CYETG11_2B.pdf [2011]
4 - www.cbsnews.com/8301-505146_162-39640329/donating-appreciated-stock-a-double-play-of-tax-benefits/ [5/10/10]
5 - www.irs.gov/newsroom/article/0,,id=211309,00.html [4/25/12]
6 - www.reuters.com/article/2012/04/24/us-column-adoption-taxcredit-idUSBRE83N0VV20120424 [4/24/12]
7 - www.section179.org [6/12/12]
8 - www.clientwhys.com/blog/tax-professionals-prepare-for-expiring-tax-breaks-in-2013/ [6/12/12]
9 - www.forbes.com/sites/feeonlyplanner/2012/02/21/tax-strategies-that-can-help-amid-the-uncertainty/ [2/21/12]
10 - www.forbes.com/sites/investor/2011/07/12/a-guide-to-high-yield-havens-master-limited-partnerships/ [7/12/11]

Tags: financial planning

Shepherd Financial Partners March 2012 Financial Market Review

Posted by Patricia Manko on Thu, Apr 12, 2012 @ 01:23 PM

Click on the image below to view the full length version of the monthly market commentary produced by our parent firm, Shepherd Financial Partners.


march newsletter resized 600

Tags: financial planning, wealth management

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