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Financial Planning for Children with Special Needs

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Financial Planning for Children with Special Needs

  1. 1. SPECIAL NEEDS PLANNING <ul><li>A presentation for parents and caregivers of children and adults with special needs </li></ul>[email_address]
  2. 2. SPECIAL NEEDS PLANNING <ul><li>Prepared by Randy Hope Steen, Esquire </li></ul><ul><li>The Law Office of Randy Hope Steen </li></ul><ul><li>403 S. Bonsall Road </li></ul><ul><li>Coatesville, PA 19320 </li></ul><ul><li>T 215.570.0047 </li></ul><ul><li>[email_address] </li></ul><ul><li>www.rsteenlaw.com </li></ul>[email_address]
  3. 3. What is Special Needs Planning? <ul><li>A discretionary trust created for a disabled individual as a way to supplement the person’s public benefits. The trust specifically provides funds in addition to the child’s public benefits to enhance the quality of the child’s life </li></ul><ul><li>Public Benefits may include SSI, Medicaid, Section 8 Housing, and other federal or state sponsored assistance programs based on financial need </li></ul>[email_address]
  4. 4. Potential Advantages of a Special Needs Trust <ul><li>Protects assets </li></ul><ul><li>Maintain a home </li></ul><ul><li>Protects the disabled beneficiary </li></ul><ul><li>Covers additional services/therapies/equipment </li></ul>[email_address]
  5. 5. A Special Needs Trust Can Help Pay For… <ul><li>Personal attendant </li></ul><ul><li>Medical goods </li></ul><ul><li>Dental care </li></ul><ul><li>Surgery or medical procedures </li></ul><ul><li>Private rehabilitation </li></ul><ul><li>Psychological support </li></ul><ul><li>Home modifications </li></ul><ul><li>Stamps and writing supplies </li></ul><ul><li>Drug and alcohol treatment </li></ul><ul><li>Recreational/cultural experiences </li></ul><ul><li>Additional therapies/activities </li></ul><ul><li>Enrich quality of life </li></ul>[email_address]
  6. 6. What are 2 Basic Requirements of Special Needs Trusts <ul><li>Trustee has total control over the monies inside the Trust </li></ul><ul><li>The child/dependent can have no power, authority or control over the Trust </li></ul>[email_address]
  7. 7. Who would be the Trustee? <ul><li>Depends on the specific issues in the situation/estate </li></ul><ul><li>A trusted family member(s), friend(s), a corporate fiduciary, bank, trust company, or a combination of an individual, and corporate fiduciary serving together </li></ul>[email_address]
  8. 8. What qualities are important in a Trustee? <ul><li>Good heart </li></ul><ul><li>Shared values </li></ul><ul><li>Financially savvy </li></ul><ul><li>Advocate </li></ul><ul><li>Resolved </li></ul><ul><li>Organized </li></ul><ul><li>A Trustee who will follow your wishes as outlined in your Letter of Intent </li></ul><ul><li>You do not have to have one person shoulder the responsibility alone. </li></ul>[email_address]
  9. 9. WHAT ARE SPECIAL NEEDS PROVISIONS? <ul><li>Specific legal trust provisions which state that the assets of the trust are to be used as a supplement to, and not a replacement for the needs based public benefits a beneficiary is receiving </li></ul>[email_address]
  10. 10. Where do I put these Special Needs Provisions? <ul><li>Last Will and Testament, or in a separate Special Needs Trust </li></ul><ul><li>3 rd party Special Needs Trusts, are not considered an available resource for Medicaid, governed by 42 U.S.C Section 1396p(d)(3)(B) </li></ul><ul><li>Special Needs Trusts created by the disabled beneficiary , are treated as available assets for Medicaid payback, governed by 42 U.S.C. Section 1396p(d)(3)(A) </li></ul><ul><li>All issues in estate determine placement </li></ul>[email_address]
  11. 11. Who Prepares The Special Needs Trust Provisions? <ul><li>Attorney who routinely prepares Special Needs documents </li></ul><ul><li>Placement of Special Needs provisions </li></ul><ul><li>Flexibility in document provisions </li></ul>[email_address]
  12. 12. Is it expensive? <ul><li>This is critical planning that should be considered! </li></ul><ul><li>Cost of preparing a Last Will and Testament, which you need anyway </li></ul><ul><li>Cost of a separate trust varies from attorney to attorney </li></ul><ul><li>Must be Attorney experienced in drafting Special Needs Language </li></ul><ul><li>Team Approach from your Advisors </li></ul>[email_address]
  13. 13. How to determine how much is needed to fund a Special Needs Trust? <ul><li>Current cost of care </li></ul><ul><li>Future Costs/Life Expectancy </li></ul><ul><li>Benefits </li></ul><ul><li>Home </li></ul><ul><li>The unknown </li></ul><ul><li>Life Care Plan </li></ul>[email_address]
  14. 14. How much is needed to fund a Special Needs Trust? <ul><li>What are the basic housing costs? </li></ul><ul><li>Custodial care? Nursing services? </li></ul><ul><li>Personal Needs? </li></ul><ul><li>Transportation costs? </li></ul><ul><li>Clothing? </li></ul><ul><li>Job Coaching? </li></ul><ul><li>Entertainment? </li></ul><ul><li>Prescription Drugs? Over the counter drugs? </li></ul><ul><li>Meals? </li></ul><ul><li>Additional Education? </li></ul><ul><li>Tuition? Books? </li></ul><ul><li>Special Equipment? </li></ul><ul><li>Service Animals? </li></ul><ul><li>Therapies? </li></ul>[email_address]
  15. 15. Where do I get the money to fund the Special Needs Trust? <ul><li>Gift existing assets </li></ul><ul><li>Leveraging wealth </li></ul>[email_address]
  16. 16. Examine Finances <ul><li>Review all Parent’s and Grandparent’s assets </li></ul><ul><li>No funds outright from anyone </li></ul><ul><li>Check beneficiary designations </li></ul><ul><li>Choose the right assets for the trust </li></ul>[email_address]
  17. 17. What are the pros and cons of funding the trust with assets I have? <ul><li>Pro’s </li></ul><ul><li>Wealth exists </li></ul><ul><li>No funding costs </li></ul><ul><li>Con’s </li></ul><ul><li>Lose control of assets </li></ul><ul><li>No money left </li></ul>[email_address]
  18. 18. What are the pros and cons of purchasing life insurance? <ul><li>Pro’s </li></ul><ul><li>Leverage wealth </li></ul><ul><li>Cost effective </li></ul><ul><li>Generally Creditor Protected </li></ul><ul><li>Asset </li></ul><ul><li>Gifts of premiums using Annual Gift Tax Exclusion </li></ul><ul><li>Income and Estate tax free death benefit </li></ul><ul><li>Tax deferred basis on growth </li></ul><ul><li>Estate equalization </li></ul><ul><li>Con’s </li></ul><ul><li>Pay premiums </li></ul>[email_address]
  19. 19. The importance of planning today <ul><li>TAKE CARE OF IT NOW! </li></ul><ul><li>Life is unpredictable </li></ul><ul><li>Peace of Mind </li></ul><ul><li>Everyone needs a Will </li></ul><ul><li>Appointing Guardians </li></ul><ul><li>Quality of life </li></ul><ul><li>Enrichment of life </li></ul>[email_address]
  20. 20. WHAT IF YOUR CHILD HAS ASSETS OF THEIR OWN? <ul><li>Lawsuit proceeds, gifts, inheritances, etc. </li></ul><ul><li>Self-Settled Special Needs Trusts </li></ul><ul><li>Medicaid Payback </li></ul>[email_address]
  21. 21. SPECIAL NEEDS POOLED TRUST ACCOUNTS <ul><li>Established by a nonprofit charitable organization for the disabled beneficiaries regardless of age </li></ul><ul><li>Beneficiary can add their own assets </li></ul><ul><li>Beneficiary who is 65 or older must have a formal finding of disability under Social Security to qualify </li></ul><ul><li>Funds are pooled together </li></ul><ul><li>When used? </li></ul><ul><li>Medicaid payback </li></ul>[email_address]
  22. 22. CHARITIES AND SPECIAL NEEDS PLANNING <ul><li>Charitable Trusts and tax deductions </li></ul><ul><li>How it works </li></ul><ul><li>No Medicaid Payback </li></ul><ul><li>For the beneficiary’s lifetime </li></ul><ul><li>Leave a legacy </li></ul>[email_address]
  23. 23. Leave a Legacy-Giving Back to Charity <ul><li>Give back to charities </li></ul><ul><li>How gifts can be made </li></ul><ul><li>Life Insurance </li></ul><ul><li>Income and estate tax deductions </li></ul><ul><li>Scholarship Funds </li></ul><ul><li>Endowments </li></ul>[email_address]
  24. 24. Other Things To Think About… <ul><li>Life Care Plan </li></ul><ul><li>Letter of Intent </li></ul><ul><li>Early Intervention, and the Intermediate Unit </li></ul><ul><li>IDEA-Individuals with Disabilities Education Act </li></ul><ul><li>IEP-Individualized Education program </li></ul><ul><li>Financial Planning </li></ul><ul><li>All financial goals </li></ul><ul><li>Getting the right attorney </li></ul><ul><li>Team Approach </li></ul>[email_address]
  25. 25. What is a Life Care Plan? <ul><li>A plan for the special needs beneficiary’s life </li></ul><ul><li>Quality of life </li></ul><ul><li>Seizing opportunities and leveraging funds </li></ul><ul><li>System of accountability of trustees </li></ul><ul><li>Do not depend on other family members to take care of your child </li></ul><ul><li>Addresses savings goals </li></ul><ul><li>Life Care Planners and Special Needs Planning Attorney’s assist and guide you in preparing this </li></ul>[email_address]
  26. 26. What is a Letter of Intent? <ul><li>NOT legally binding </li></ul><ul><li>Provides direction </li></ul><ul><li>Provides specific wishes </li></ul><ul><li>Details medical condition, history, medications, doctors, therapists, daily care needs and routines, social needs, emotional well being, housing, services, etc. </li></ul><ul><li>Snapshot of a day </li></ul><ul><li>Normally drafted with the assistance of Attorney and/or Life Care Planner </li></ul>[email_address]
  27. 27. HELP… <ul><li>Early intervention 0-3yrs </li></ul><ul><li>The Intermediate Unit 3-5 yrs </li></ul><ul><li>IDEA -requires that all children 3-21 receive free appropriate public education, as close to home as possible. Supplemental services are to be provided to assist a child in completing their education. An assessment process to determine a child’s needs </li></ul><ul><li>IEP -a written statement about the child’s impairments, abilities and challenges that is required by the IDEA. Children are evaluated by the school district, yourself and educational professionals to determines your child’s special needs. This is an annual process </li></ul>[email_address]
  28. 28. WHAT SHOULD I DO NEXT? <ul><li>Meet with Financial Professional . Do not wait until you get organized to do this, a good financial professional will help you get organized </li></ul><ul><li>Retain an attorney experienced in drafting Special Needs documents </li></ul><ul><li>Team Approach </li></ul><ul><li>Do not put off getting your planning in order, none of us know what the future holds </li></ul>[email_address]
  29. 29. If You Have Additional or Confidential Questions… The Law Office of Randy Hope Steen 403 S. Bonsall Road Coatesville, PA 19320 T 215.570.0047 Fax 610.857.1550 [email_address] www.rsteenlaw.com [email_address]

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