Financial Planning for Your Special Needs ChildPresentation Transcript
Financial Planning for Children With Special Needs Determining the Future of Your Child James J. Di Gesu, CPA, PFS, MBA July 2009
Our Discussion Today
● Who We Are
● Why Special Needs Planning is Important
● What Is Special Needs Planning?
● The Approach: How Do You Plan?
Profile: Who We Are
● CPA and financial advisor for 23 years
● Serve high-net worth clients, corp exec, business owners, retirees and families of generational wealth
● Continue to meet the needs of these families as well as serving families with Special Needs children
● Sr. Manager with KPMG and Deloitte & Touche for 12 years
My Special Girl - Andrea
My Special Girls Michela & Andrea
Special Needs in America Today
1 out of 9 under 18 get special ed
Nearly 2 in 7 families have member with disability
21 million families have member with disability
5.5% have both adults and children with a disability
76% of the 4.3 million children with disabilities live at home.
Why Special Needs Planning is Important
● Ensure proper coordination of your financial and legal strategy to benefit you, your child and other family members
● Critical to integrate your assets with government benefits to maximize your child’s quality of life
● If and when you are no longer able to be the primary caregiver for your son or daughter, you will know that you established a plan to care for them
Integrates traditional financial planning with the unique requirements of your special needs family
● Blending your needs with your child’s, plus an effective financial and legal strategy, and access to government benefits
● Can include Wills, Trusts, Guardianship, Education on Government Benefits
● Defines your vision for your loved one’s life
What is Special Needs Planning?
Core Values of Special Needs Planning
● Your Family & Support System
● Financial Planning
● Estate and Legal Matters
● State and Governmental Benefits
● Your Well Being – (i.e., Emotional and Spiritual)
Have You … Yes or No ?
Clearly defined personal and financial goals?
Positioned assets for retirement?
Established the future care of your special needs child?
Prepared and executed Wills, and prepared a Personal Financial Plan?
Created a Special Needs Trust?
Thoroughly explored Government Benefits?
Selected a Trustee(s) and Guardian?
Completed a Letter of Intent?
Communicated your plan to friends & family?
Achieved Peace of Mind with your current plan?
Reasons to Plan
Increasing Population with Disability
Increasing Demands for Services
Increasing Life Expectancy
Increasing Costs of Care
Shrinking Government Resources
What if You Don’t Plan
The state has their plan for you and your child.
The state will choose who will care for your child.
With no plan in place, the guardian and trustee will be unable to care for the financial and emotional needs of your child.
The state decides how, when or if your assets are distributed.
If your child holds assets in excess of $2,000, Government Benefits (SSI and Medicaid) could be lost or forfeited
Due to lost Government Benefits your child’s standard of living could be reduced substantially.
What is Financial Planning I
To develop and implement a family plan to achieve personal financial goals
To accumulate and preserve wealth to meet the needs of you and your family
To Achieve Financial Security for You,
Your Child and Your Family
What is Financial Planning II
Identify Personal Goals/Objectives
Gather Personal Information And Documents
Evaluate Goals And Identify Obstacles
Develop Strategies And Recommendations
Design And Implement Plan
Review And Measure Results
Revise Plan As Needed
Personal Financial Planning
Cash and Debt Management
Income Tax Planning
Education Funding Strategies
Employee Benefit Plan Analysis
Insurance and Risk Management
Asset Allocation and Investment Management
Estate Tax Planning and Strategies
Business Succession Planning
Special Needs Planning
Special Needs Planning Process
Execute Legal Plan
Prepare Letter of Intent
Monitor and Update Plan
Traditional vs. Special Needs Traditional vs. Special Need Planning Wealth Distribution, Home Purchase, Investment Mgmt, College, Retirement General Personal Financial Planning Gifts, Inheritances, Transitional Plans, Lifetime Residential Needs, Trust Mngt Emergency Funds, Family Needs Cash & Debt Management Supplemental Expenses, Protection of Government Benefits Life, LT Disability, LT Care,Health, Home, Auto Insurance & Risk Management All Insurances,State Health Plans: Medicare and Medicaid Wills, Trusts, DPOA’s HCP,Living Wills Estate & Legal Planning Selecting Guardians,Trustees,Care Givers, SNTrust, LOI, Titling
Estate Planning Process
● Maximize Inheritance Designated to Heirs
● Minimize Estate Taxes and Expenses
● Review Testamentary Instruments,
● Beneficiary Designations and Other Documents
● Determine Guardianship of Children
● Distribute Assets to Beneficiaries
● Manage Estate Assets
Why Everyone Needs a Will
● Avoid Intestacy
● Simultaneous Death
● Designate Executor(s) Trustee(s)
● Designate Guardian(s) for Minor Children
● Provisions for Minor(s)
● Specific Bequests
● Marital Assets
The Elements of a Will Trusts for Individuals and Charity Who Will Serve as Executor , Trustee or Guardian? Plan For Estate Taxes Outright Distributions of Property WILL Elements of A Will
Estate Planning Options
Distribute Assets to Sibling
Gifts to the Special Needs Child
Disinherit the Special Needs Child
Establish a Special Needs Trust
What is a Trust?
● Minimize Estate Taxes
● Benefits Of Professional Asset Management
● Legacy For Favored Charities (with Tax Benefits)
● Provides For Your Retirement
● Manages Your Affairs If You Become Incapacitated
● Avoids Costs, Delays And Publicity Of Probate
Special Needs Trusts
Definition: The SNT manages resources while maintaining the child’s eligibility for government benefits. There are two types of Special Needs Trusts:
Support Trusts – Requires the Trustee to make distributions for the child’s support including food, shelter, clothing medical care and education. However, support trusts are not eligible to receive financial assistance through the Supplemental Security Income (SSI) or Medicaid.
Special Needs Trusts (SNT) – These trusts are the most effective approach to assist a child with disabilities.
Special Needs Trusts
Requirements for the SNT
Trustee must be give absolute control over the distribution of the funds
The child with special needs can not have the ability or authority to revoke the trust.
If money is used in a trust for the wrong reason, it could become disqualified and place future benefits in jeopardy.
The distribution rules of the trust and educating the trustee in the proper use of money is critical.
Requirements of a SNT
How much needs to be placed into the trust
Estimate cost of child’s care over their life expectancy
Value of the parents estate can be left to the trust
If there are insufficient assets from the estate, the trust can be funded from proceeds of life insurance to meet shortfall
Use of life insurance helps to meet life-long expenses
Funding the SNT
Permanent or Whole Life
Survivorship or Second-to-Die
Property and Casualty – (Home, Auto, etc.)
Personal Liability or Umbrella
Income Tax Benefits
● Cash and Debt Management
● Review Monthly Living Expenses
● Determine Extraordinary Cash Expenses
● Create Emergency Reserve Fund
● Review and Maximize Use of Debt
Income Tax Benefits
Child and Dependent Care Credit
HSA’s and FSA’s
Attending Disability/Medical Conferences
Income Tax Benefits
Section 529 Education Plans
Coverdell Education Savings Plans (CESA’s)
Custodial Accounts - UTMA’s and UGMA’s
IRA’s and Roth IRA’s
Assemble Your Special Dream Team
Family and Friends
Doctors, Therapists and Other Medical Professionals
Managed Care Giver(s)
Trustee – (Family and/or Corporate)
Personal Financial Advisor
Create Your Dream Team
What is a Managed Care-Giver?
The Special needs Trust can direct the trustee to hire a care manager. The Care Manager:
Specializes in arrangements to provide for your special needs child with the level of care required.
Social work background
Selecting Managed Care-Givers
Guardian Critical for Child with SN’s
Parents Need to Decide
Life-long Commitment of Caring
Designate Guardian within Will
● Has integrity and impartiality
● Acts in the best interest of the child
● Invests and allocates trust assets to prudent investments
● Distributes income and/or assets to the child
● Advocate for medical and financial entitlements
● Knowledge of accounting and tax-planning
● Recordkeeping and reporting ability
● Willingness to serve the duration of trust term
● Experience as a Trustee
● Has special sensitivity to a child with disabilities
Supplemental Security Income
Benefits NOT Based on Financial Needs:
Benefits Based on Financial Needs:
Supplemental Security Income (SSI)
Housing Subsidies (HUD)
In Home Support Services
What is a Letter of Intent?
Details of Biographical, Personal Information and Unique Personality Traits
Personal Care, Diet, Habits & Daily Routines
Family Details and Information
Medical Care, History and Professionals
Education, Schooling, Social and Recreational Details
Parents and Child’s Financial Information
List of Financial Advisors
Estate and Legal Documents
Current and Future Governmental Benefits
Final Arrangements of Child
Letter of Intent
Special Plan Summary
Create the ‘Special’ Financial Plan
Execute the ‘Special’ Estate Plan
Select the ‘Special’ Dream Team
Share your ‘Special’ Plan
Be Sure to Take Care of ‘Special’ You
Summary of Special Plan
Currently Sr. VP with Wealth Health LLC – Personal Wealth Management firm, located in Roseland, NJ, www.wealthhealthllc.com
My blog on planning for special needs: JDiGesu.com