Even without special needs, the loss of a parent is an extraordinarily difficult life event. While every special need, and every individual, has their own nuances, members of our community have a more acute challenge: up to 80% of individuals with special needs are living in their childhood homes and have never experienced daily life without the support of their parents. Losing mom and dad isn’t just the loss of a loved one, it’s the loss of their core financial, social, and emotional infrastructure. Moreover, many of the supports we rely on may not be available to our children, and they need even more support that we do.
While there is no substitute for a parent’s love or care, with proper planning, stress and worry can be reduced, many of the concerns that keep parents up at night can be addressed, crises can be avoided, and the transition to life after mom and dad can be made easier.
So why do only 1 in 3 families have a will? Even fewer have done any financial planning, and if you ask most parents about comprehensive care planning, overwhelmingly you’ll see expressions ranging from blank stares, to guilt, to exasperation.
We get it! Keeping our heads above water with everything going on in life is hard enough. Managing the medical, caregiving, educational, and social needs of your child is already exhausting; plus, you still have all the responsibilities of a non-special needs parent: work, spouses, other children, helping your parents, and more.
For most of us, it is impossible to get to everything on the to do list, so we prioritize, and putting off long-term planning “until things settle down” has no immediate consequence, so it is the action item that gets put on the backburner. Besides:
- Only wealthy people need wills and special needs trusts. I don’t have enough money that this applies to my family.
- My child has government benefits that will continue when I am gone, so I don’t need to plan.
- My other children will handle everything when I pass, so there is no need for me to do anything.
- I’ve done some planning, it’ll be fine. The will I downloaded online is sufficient for my needs.
- All financial planners and lawyers do is figure out the money. I don’t have any money; I am worried about care. Planning won’t help MY issues.
- Planning is difficult and time consuming and I have too much going on, and not enough time as it is. I am not dying any time soon. I’ll get to it – eventually.
If this sounds like you (and statistically speaking it probably does), every one of these responses is based on misinformation, or a fallacy that has become ingrained in our community. We have to fix this because it leaves our loved ones vulnerable and may lead to unintended, sometimes tragic outcomes.
Below are three scenarios: same modest assets and the same family dynamic. The only difference is the planning.
Barbara, 55, is the mother and primary caregiver of her son, Matthew, 28, who lives with her. Matthew has autism and other comorbid conditions including epilepsy and gastrointestinal issues. Barbara owns a modest home, has a small IRA and social security, and together with her son’s part-time income and SSI, is able to make ends meet. Barbara spends her days driving Matthew to and from his job and various therapies, preparing meals, helping with daily hygiene, and managing medications. Matthew is partially verbal, receives Medicaid benefits, and, when not working, has learned to take the bus to an adult day program.
Barbara feels alone, stressed, and has missed her last 2 doctors’ appointments. As a results of her untreated hypertension, she suffers a fatal heart attack.
Outcome 1 (No Plan):
Despite Matthew’s future being Barbara’s biggest concern, she doesn’t know how to create a plan, or where to start. Like 2/3 of Americans, no estate or care planning has been done to protect Matthew’s future. Upon Barbara’s demise, Matthew inherits $25,000 which he cannot manage or properly utilize. Not only can he not live safely on his own, but he cannot afford the home without his mother’s contribution. His inheritance makes him ineligible for Medicaid benefits which terminate 30 days after his mother’s passing. The home he has always lived in needs to be sold to settle the estate.
He is soon to be homeless, uninsured, no longer has transportation to his job, and cannot participate in his day programs or therapy because of his lost benefits. Without his mother to monitor his medications, he has a seizure and is taken to the emergency room where a social worker is brought in to evaluate his circumstances. Since Matthew is uninsured, he receives a $25,000 hospital bill wiping out his inheritance. If someone helps him find his social security card and birth certificate and assists in completing the applications, he can now reapply for benefits. Hopefully, he can find a safe living situation for the next six months while his applications are reviewed.
Outcome 2 (Incomplete/Poor Planning):
Barbara creates a trust with her local attorney. In this trust, Barbara names her nephew, David, as Matthew’s trustee. When Barbara passes, David learns of his appointment as trustee and scrambles to try to find appropriate housing for Matthew, however, finds that there is a waiting list at many homes. He decides that Matthew can live with him while they wait for a housing option to open up. Barbara’s IRA, which hadn’t been updated in years, named her husband (deceased) then her children as beneficiaries.
IRAs (and other qualified plans) are not governed by wills, but by the beneficiary designations. The incomplete planning means that while Barbara’s home and other assets were included in the trust, the IRA still distributed to Matthew. David will need to go to court, with the hope of setting up a 1st party special needs trust to hold the IRA assets. There are now 2 trusts with different regulations to manage – and the meaningful legal expenses of setting up a trust and going to court.
David has a hard time understanding government benefits regulations and managing the two trusts. With the best of intentions, he makes a distribution that triggers a loss of benefits. Matthew was told that he should consider suing David, but he doesn’t know if he should, nor does he have any desire to sue his cousin who was only trying to help – leaving him with little recourse. David, in addition to his continued housing search, he is now looking for a benefits expert to help him appeal the Medicaid decision and reapply for benefits.
Outcome 3 (Proper Planning):
Barbara and Matthew create a comprehensive estate and care plan that includes all of Matthew’s daily living needs, medications, schedules, housing goals, and a supplemental needs trust. Working with their care coordinator, appropriate supports are determined and a plan for Matthew’s life after Barbara’s passing is put in place. With the added supports, and improved mental and physical health, Barbara doesn’t miss her doctors’ appointments…
When Barbara eventually passes, $25,000 and the balance of her IRA are deposited into a supplemental needs trust for Matthew’s benefit. Barbara’s financial advisor put a small 20-year term life insurance policy in place. At 55 years old, she paid $100/month and got $500,000 in benefit, which funded Matthew’s special needs trust. All of Matthew’s benefits remain in place since the trust does not count as a Medicaid asset. Matthew moves into the group home that he and his mother previously selected, and the trust provides furnishings. Since Barbara had a care plan that she had been continuously maintaining, the group home receives a comprehensive medical history, medications list, and list of all programs and therapies that are part of Matthew’s life. Matthew emails his trustee from time to time when he needs something – a new tv, an XBOX, or tickets to a baseball game. Most of Matthew’s needs are provided for by the group home and his government benefits, which are protected by his expert corporate trustee, and additional therapies and activities are paid for by his trust. David, as trust protector, visits his cousin once a month and makes sure that all is well, but doesn’t have any daily responsibility or fiduciary liability. The trust is paying for David and Matthew to go to Disney World together next month, a dream that Barbara included in Matthew’s care plan.
Matthew misses his mother, but is safe and secure and has new-found friends and robust support services in the residence he and his mother selected.
Yes, YOU Do Need to Plan:
- Even for families with modest assets, comprehensive, integrated financial, care, and legal planning are critical. In most states, the threshold for triggering a loss of Medicaid benefits is only $2,000. Most families will leave that or more behind.
- Without proper planning, the benefits you anticipate your loved one receiving may not be there. Losing benefits at the same time as losing a parent is an avoidable crisis – if YOU plan.
- Assuming your other children, or another family member can handle everything rarely works out the way families think. Ask yourself: How well do they understand your child’s needs? What about their family and work obligations? Do they understand trusts and government benefits regulations? Are they prepared for a lifelong commitment? Are they an age appropriate appointment that will align with your child’s lifetime?
- Half a plan is not much better than no planning at all. Special need planning requires a team approach, and interdisciplinary expertise.
- Financial, legal, and care planning are interwoven. Protecting benefits and creating a trust and financial plan that accomplish your goals will lead to better care. Work with advisors to determine the right role for government, family, and professionals to meet your child’s needs and make your goals achievable.
- No one knows when their time will be up – don’t leave your loved one’s future up to chance. Lack of planning will never lead to a better outcome than a well thought out plan.
Charlie Munger once said, “All I want to know is where I’m going to die, so I’ll never go there.” Absent knowing the when, or the where, the best we can do is be prepared, have a plan, and make sure that we have done all that we can to protect our loved one’s future. Without such planning, we leave our loved ones vulnerable, and create an undue burden for the friends or family who are left to pick up the pieces.
So, where should you start?
1. Don’t delay and don’t be overwhelmed.
Believe it or not, creating a comprehensive plan is not nearly as difficult, or expensive as you think. When working with the right professionals, all your legal, financial, and care planning care be done in as few as 10, but more commonly 20 hours, spread out to meet your schedule. Depending on where you are located, total cost could be under $5,000 for everything – including your supplemental needs trust and a review of your existing benefits, which may actually increase your household’s monthly cash flow.
2. Meet with an attorney who has an expertise in special needs planning.
This is not your brother-in-law the real estate attorney! Look for an attorney who is a member of the Special Needs Alliance, Academy of Special Needs Planners, or has the CELA designation. Ask them about their special needs planning experience. Topics to include in your discussion:
- Living Wills
- Powers of Attorney
- Supplemental Needs Trusts
- Successor Guardians (if applicable)
- Appropriate roles for family, friends, and professional trustees
- Integration with spouse’s or ex-spouse’s planning
- Stand-alone trusts and potential for gifts from other family members
3. Meet with a Financial Advisor with expertise in special needs planning.
All financial advisors are not created equal. Look for an advisor with the ChSNC designation from the American College, or members of the Academy of Special Needs Planners. Ask about how they approach special needs planning, and how it is different from their ordinary retirement planning. Topics for your discussion:
- How much money would be needed to maintain my child’s current lifestyle? What is the budget for your child and how will it evolve over time?
- Review all qualified plans and existing life insurance. Do beneficiary designations align with your trust?
- Are there tools or products that can used to meet your goals?
- Do you have the right government benefits in place, or should you be receiving more support?
- Are there strategies to save more, such as funding an ABLE account, that will help protect your child?
4. Engage a care planner with care coordination services and government benefits expertise.
A good care plan will review all the medical, legal, social, and financial needs of your loved one and will be the guiding force for your plan. Understanding the care needs and budget will help determine your financial planning goals and what type of trust should be created. It will also identify who in your circle of support should be a part of your plan, and in what capacity. Topics to include in your discussion:
- Review of government benefits – is your loved one entitled to more?
- Appropriate long-term housing options
- Employment and daily activities that enrich your child’s life
- Medications, daily schedules and the tips and tricks that make life “work”
- Gathering and digitizing key documents such as IEPs, benefits awards letters, estate and financial planning documents, diagnostic results, etc.
- Case coordination services – are there things that you can delegate to an expert?
5. Have the hard discussions.
Death and taxes are inevitable, and ignoring the topics don’t make them go away, it just leaves you unprepared. Talk to your family, your advisors, and your loved one about what will happen in the future. What are your goals, and are they shared with your loved one and your circle of support? Don’t assume that family will just pick up where you left off – ask them! Often family members say what they think you want to hear; dig deeper. Very often it turns out that family members don’t understand what is being asked, how much work you’re doing, and what being a guardian, caregiver, or trustee would mean in practice, or how it would impact their daily life. It is better to figure this out now, while you can plan, than to make an assumption that proves false when you’re gone. Also, really consider everything you do, and if it is reasonable to ask someone else to assume that role.
6. Bring everyone together – annually.
Congratulations, you’ve put together a comprehensive plan with your legal, financial, and care professionals! Now is the easy part – maintaining it. Please do not leave your documents on the top shelf of your closet to collect dust. Life is dynamic, and we all hope to live a long time. A care plan that gives all the details about school lunch requirements for your 12-year-old isn’t going to be helpful for your 37-year-old when you pass in 25 years!
Bring your team together at least once per year. Update all your plans. Talk about benefits, housing, changes in goals, employment, diagnoses, medications, and more.
If you use a digital care planning platform, log in and make an update. Proactive families frequently do this as often as monthly. Even better, if digital, everyone in your circle of support can access the update instantly, so the whole team will be operating off the same playbook. This can save time and money when reviewing your plans with your lawyers and financial advisors.
Every family with a loved one with special needs should have a plan in place – it’s not a matter of rich or poor. Our children and loved ones who rely on us during our lifetimes are relying on us to think about the entirety of their lifetimes. You’ll rest easier knowing your child is protected, and you may even find that there are more resources or benefits available to ease your financial concerns, or coordination services that can lighten your workload.
Get started – it’s not hard, not that expensive, and yes, YOU do need a plan!
ABOUT THE AUTHOR:
Joshua Fishkind, J.D., MBA is the CEO and a co-founder of Hope Trust, a full-service care planning company dedicated to helping families plan for their loved one with special needs, provide daily care management and support, and administer special needs trusts.
Read the article here.