Special Needs Financial Planning featured in FPA paper

Posted by Patricia Manko on Fri, Apr 19, 2013 @ 12:59 AM

Key takeaway: While an SNT is necessary in almost all cases, there is much more to special-needs planning than creating a plan that includes an SNT. A letter of intent—the ideal starting point for the financial planner to inform the financial components within the planning process, and collaboration with mental health and legal professionals—will greatly enhance the effectiveness of the services the financial planner is able to provide special-needs clients.

describe the imageMost special-needs families are not properly planning for their children’s futures and the consequences are potentially catastrophic (Lauderdale et al. 2010). While planning for the future of special-needs loved ones has always been a necessity, it’s paramount today because of the higher incidence of diagnosed disabilities, longer life spans resulting from medical advancements, increasing long-term care costs, and the reduction of government support (Erickson and Lee 2008; Hoyt and Pollock 2003; Lauderdale and Huston 2012b; Nadworny and Haddad 2007; Saposnek, et al. 2005). 

Emotional and legal issues complicate creating an adequate comprehensive plan. Financial advisers can begin to address the concerns particular to each family by forming a team of legal and mental health professionals to work closely with families while preparing a suitable plan. Special needs trusts, or SNTs, remain vital to planning for disabled individuals to protect government benefits eligibility, manage assets, and provide care continuity when guardianship is deemed necessary (Stone 2006). For keeping the social and emotional consequences to a minimum, letters of intent are also valuable tools to help transition care providers with as little stress on the special-needs child as possible. 

Financial planners can increase their accessibility to special-needs families by preparing themselves to address the technical and emotional challenges through a holistic team approach.
While an SNT is necessary in almost all cases, there is much more to special-needs planning than creating a plan that includes an SNT. A letter of intent—the ideal starting point for the financial planner to inform the financial components within the planning process, and collaboration with mental health and legal professionals—will greatly enhance the effectiveness of the services the financial planner is able to provide special-needs clients. 

Though the financial plan for a special-needs family is an amplified form of a traditional plan, the team of professionals is necessary for addressing the social and emotional issues particular to each family. Addressing such concerns directly affects the ultimate form and adoption of the plan designed specifically for families with special-needs dependents.

Tags: Special Needs Trusts, special needs Letter of Intent

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.

SNP PLANNING POINTER:

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. 

SNP STORY:

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

The Five Factors of Special Needs Financial Planning

Posted by Patty Manko on Thu, Jan 24, 2013 @ 02:53 PM

five actors of special needs planningOne of the major obstacles that can prevent  families from planning is that they are frequently consumed by daily crises. The thought of planning ahead can simply be overwhelming. Realizing that each family situation is unique, we have identified the Five Factors that must be considered in conjunction with special needs planning.

These core planning points are by no means an exhaustive list of planning points. They will provide a baseline of what should be considered in special needs planning for every stage. Think of them as the basics you need to consider regardless of the age of your family member. They should, of course, be reexamined from time to time to be certain the recommendations stay current with your own family's needs.


FAMILY & SUPPORT FACTORS:

  • Ask the people whom you want involved with your family member's life whether or not they want to be involved before you just name them in your plan. 
  • Help prepare future guardians, caretakers, trustees and successors for their roles.
  • Complete a Letter of Intent -click here to download a sample letter of intent.
  • When grandparents or other friends or relatives offer to help by including your child in their gift or estate plans, say THANK YOU. 
  • Encourage them to have their advisors speak with your advisors who specialize in disability planning. 
  • Be connected with family support agencies in your area.

EMOTIONAL FACTORS:

  • Help your other children to meet and talk with children similar in age who also have a sibling with disabilities.
  • Seek professional help when you need it.
  • Be patient with yourself, your spouse and your family.
  • Learn as much as you can about your child's diagnosis and abilities.

FINANCIAL FACTORS:

  • Review your current financial plan -as often as possible.
  • Work with a professional who is knowledgeable in disability planning. Click here to view our checklist for interviewing a financial planner. 
  • Protect your family with adequate life insurance, long-term disability insurance, and long-term care insurance coverage for primary caregivers.
  • Identify all employee benefits for which you are eligible.
  • Do not establish a savings or investment account in your child's name.


LEGAL FACTORS:

  • Review your current estate plan -at least every five years. 
  • Create a Special Needs Trust
  • Name a guardian for your child or children in the event of your premature death or disability.
  • Check beneficiary designations on all life insurance, retirement plan accounts and annuities. These include employer benefit plans too.


GOVERNMENT BENEFIT FACTORS:

  • Advocate for your child. Join forces with your state & local advocacy agencies.
  • Know and pursue your child's legal rights and entitlements.
  • Maintain eligibility for your child's government benefits at all times, even if they are not currently receiving them.
  • Apply for Social Security Survivor's benefits promptly when a parent of a child with a disability dies.
special_ needs_financial_ planningFor further information about the Five Factors of Special Needs Financial Planning, click here to contact us.

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

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
special_needs_financial_planning_newsletter
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

Siblings and a Letter of Intent

Posted by Patricia Manko on Thu, Nov 08, 2012 @ 05:18 PM


describe the imageParents should make a point to complete the Letter of Intent to document the important aspects of your child’s life. Share it with the future caretakers today, including siblings and make it a living document.  Don’t just leave it for them after you are gone.

 Determining Roles for Siblings to Play

 A pragmatic approach is an effective means to define a role for siblings. This approach can utilize assigning defined responsibilities.

Responsibilities may be shared.  Tasks and roles may be shared, which will allow a sibling to contribute without feeling overwhelmed that they have to be the ” everything” or “IT” person in the family.

Partner with a professional. Siblings can partner with experienced special needs planning professionals to help them provide the best solutions for their brother or sister.

describe the imageSome functional roles siblings may play:

Caregiver, Guardian

Health care proxy, Power of attorney,

Conservator, Trustee, Trust advisor

 Investment manager, Tax preparer,

 Bookkeeper to help pay bills,

 Representative payee for  SSI

  Advocate

                  Just be a brother  or sister!

For more information, click below to attend a presentation of No Sibling Left Behind or Planning is a Family Affair

Contact us for  further information

 

 

Tags: siblings, Letter of Intent, friendship, guardianship, special needs Letter of Intent

Letters of Intent and Sharing Your Financial Values

Posted by Patricia Manko on Thu, Mar 29, 2012 @ 12:14 PM

 family meeting resized 600
It is important to articulate your own values concerning money in the context of your vision for the future of your child with special needs. You need to make sure the people who you expect to implement your plans understand very well what they are. This is something many people find to be a difficult and even daunting task. Here are some tips for making the process go smoothly.

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 discussion in a formal meeting or a large family setting is not always the best.

We recommend that you speak to one child at a time, to get their feelings about their willingness to help. This will offer them an opportunity to share ideas with you, rather than you telling them what you are hoping 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 understand your intentions.

After everyone has had an opportunity to discuss their feelings and ideas in an informal way, you may wish to plan a discussion with 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 you vision.

* Talk about 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 (for more information on selecting a trustee, see Chapter 9 of our book "The Special Needs Planning Guide"). 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.

Talking about money

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 or the specific costs of providing services to individuals with disabilities.

Sometimes parents feel that they must treat all of their children equally. They feel that their children expect it. In many cases, however, siblings understand the financial realities and would rather make sure that their brother or sister is taken care of.

One the first steps necessary 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 that it takes money to pay for services, staff, housing expenses, employment supports, transportation educations, health care services and the like. We also know that government does not have an endless supply of money to fund these services.

Talking to your family members about these important issues, and bringing them into the process of finding solutions, is so important.

 
Special Needs Planning Pointerletter of intent resized 600
 
Share your Special Letter of Intent with family members and caregivers. A fill-in-the-blank version is included with our book, The Special Needs Planning Guide. Parents should make a point of completing one and keeping it up to date. Now is a good time to share it with future caregivers and make it a living document. Do not just leave it up to others to figure everything out after you are gone. Preparing this document in advance is a priceless gift that only you can give.
 

Tags: Letter of Intent, special needs Letter of Intent

Subscribe via E-mail

Follow Me

Special Needs Financial Planning
Our Most Recent

Special Needs Financial Planning
Topics We Follow

View More