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For parents who have a child with special needs, planning for their loved one’s life after they themselves are gone can be overwhelming. Breaking the process down into manageable parts and working with specialized professionals and companies can help.
“The three main structures a family should put in place to provide future protection for their child relate to money management, self-care and housing,” said certified financial planner Michael Beloff, partner and Chartered Special Needs Consultant with Belvedere Wealth Partners in Stamford, Connecticut.
Money management: If the child receives government benefits, such as Supplemental Security Income or Medicaid, parents will usually establish a so-called special needs trust that will shield assets to allow the child continued access to those benefits. The trustee is the person who oversees the funds and other trust provisions not under the child’s control, Beloff said.
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Life insurance is essential, said CFP Colin Meeks, founder of Maryland Financial Advocates in Baltimore.
“It’s the cheapest way to fund a trust,” he said. “Because you need to know what’s left over [from your estate] in order to care for the child, it creates that certain bucket of money.”
Self-care: Parents must arrange the services their child will need to live independently or semi-independently (e.g., household management, medication management, doctor visits, personal care, etc.).
These supports may be overseen by a court-appointed conservator (or guardian, depending on the state) who makes all decisions regarding an individual’s financial and/or personal affairs, or by a person with power of attorney, who can make decisions, as well as the individual, Beloff said.
Parents are encouraged to write a “letter of intent,” a common planning tool that serves as a guide for those who will care for the child in the future.
It should cover family history, medical care, benefits, daily routines, diet, behavior management, residential arrangements, education, social life, career, religion and end-of-life decisions, according to the Autism Society.
Housing: With respect to future housing for the child, location is more important than the house itself, said CFP Andrew Komarow, founder of Planning Across the Spectrum in Farmington, Connecticut. Parents should think beyond keeping their loved one in the family home, he said.
“It’s more important to look at the individual,” Komarow said. “What interests and supports do they need?
“Parents may consider retiring to a community that supports the interests of the child.”
There is a trend toward more community-based living, said CFP Gordon Homes with WestPoint Financial in Indianapolis.
“State-administered Medicaid HCBS waiver programs allow people with disabilities to live in a house or apartment,” he said. “The state, in turn, provides staffing for a group of similar residents.
Sometimes, a group of families will purchase a collection of houses or condominiums, Homes said. “We’re seeing people rehabbing houses for roommate living, resulting in neighborhoods of people with special needs,” he said.
Building the team
One important role for a financial advisor is coaching parents on how to approach other family members and friends regarding the care of the loved one with special needs going forward, according to Homes at WestPoint Financial.
“They need these assurances in the conversation: that the government benefits will remain in force, there’s a source of money, there’s a team — such as a care manager, behavioral therapist, personal attendant care giver, guardian, etc. — and there’s a letter of intent,” he said.
It’s essential to work with specialists in this type of planning, Komarow said.
“A trust is not just a financial plan,” he said. “Specialty trust companies may be staffed, for example, by social workers who will arrange for daily living needs.”
But parents also have to find attorneys experienced in special needs planning, Komarow added. “Don’t tell them what kind of trust to set up,” he said. “Instead, let them know what you’d like to see happen, and let the attorney tell you what is the right trust for your situation.”
A special needs trust could add an additional $3,000 to $6,000 to a regular family estate plan, depending on its complexity and the area of the country, according to Charles Italiano, assistant director at Westchester Disabled on the Move.
Komarow recommends parents check the websites of the National Elder Law Foundation and Academy of Special Needs Planners for help with finding specialized professionals.