10 Common Questions About Special Needs and Estate/Life-care Planning
Q: Why is financial preparation and estate planning so important for families with members having special needs?
Often, families understandably become so focused on day-to-day needs that they lose sight of the larger life-care issues and the costs that loom ahead. Financial preparation can seem like an overwhelming task. Financial security and independence is at risk for the child with special needs and the other members of the family, including the caregivers. Without proper planning, parents could make mistakes – such as accepting a gift from a generous relative – a gift that could disqualify their child from critical governmental programs. Additionally, the costs of care over time could drain family finances and harm the parents’ ability to provide for other children and/or fund their retirement.
Q: How should a family get started?
One of the best ways to get started is to catalogue important information about the family member with autism/special needs so that it is all in one place and accessible to future caregivers in an emergency. An extremely effective device for compiling this information is the letter of intent.
Q: What’s a letter of intent?
Although not legally binding, a letter of intent offers guidance to the courts and trustees for interpreting care instructions and typically includes emergency contacts, medical history, preferred living arrangements, education or work arrangements, recreational preferences, behavioral challenges, and a summary of family and financial information. The letter is a good planning document for parents/caregivers to share with a Special Care Planner or other financial professional who specializes in working with special needs, attorneys, CPAs and others who can use it as a guide in drawing up plans, wills, trusts, and other documents. Massachusetts Mutual Life Insurance Company (MassMutual) offers a free template of a letter of intent that families can use to begin developing or supplementing life-care plans for family members with disabilities or other special needs. The letter, created with the input of MassMutual professionals with decades of combined experience in special needs financial preparation, is a fillable Word document that can be customized by parents and/or caregivers to reflect their specific situations. Parents and caregivers can visit www.massmutual.com/specialcare to request the letter, which is on a compact disc, and a MassMutual Special Care Planner will contact the family in response.
Q: Why should families with members with special needs involve a Special Care Planner?
MassMutual Special Care Planners receive advanced training and information in estate and tax planning concepts, special needs trusts, government programs, and the emotional dynamics of working with people with disabilities and other special needs and their families. No one professional can provide everything a family needs. A Special Care Planner works with an integrated team made up of an attorney, a CPA and others — such as social workers, caregivers, and other financial professionals — all working together in the best way to serve the family. The Special Care Planner certificate program is offered by The American College in Bryn Mawr, PA, exclusively for MassMutual financial professionals.
Q: What is a Supplement Special Needs Trust (SSNT) and why is it important?
A SSNT helps provide financial resources to an individual with special needs without jeopardizing eligibility for federal aid. Even one dollar more than $2,000 in assets can disqualify an individual from governmental programs. Assets in an SSNT do not count against this $2,000 limit, making it an effective vehicle for enhancing the lifestyle of the person with special needs. You need not be wealthy to have a trust. There are many ways to fund trust accounts.
Q: What should a parent of a child with autism or other special needs know about wills?
Intestacy laws in certain states dictate that a child will inherit a portion of the parent’s estate, which is usually enough to disqualify a child with special needs from receiving support from federal programs. It’s important for both parents to have wills and for the wills to coordinate with other planning documents, such as the child’s trust. For example, the SSNT can accept the child’s share of the estate, thereby preserving the child’s eligibility for governmental programs.
Q: How should parents go about choosing guardians, caregivers, and trustees?
It’s very important to select the right people for these jobs and advise them of your selection. A great caregiver (guardian) might be a terrible money manager (trustee) and vice versa. The co-trustee or “committee” approach is often used in difficult situations in which the burden of care and/or oversight is too much for one person alone.
Q: What happens when the child becomes an adult?
Many parents assume they will retain guardianship of their child, regardless of age. However, once your child reaches age of majority (typically at age 18 or 21, depending in which state you live), you must file for legal guardianship. In many cases, the guardianship process is merely a formality. But it’s important to remember that guardianship is a court-appointed procedure.
Q: What long-term issues should a family consider?
Housing, education, work opportunities, recreational programs, lifestyle, daily transportation, medical costs and custodial care are among many long-term issues that families with members having special needs must address. It’s important to develop projections for each of these costs when determining a child’s lifelong financial needs.
Q: Where else can a family with a member having special needs turn to find help?
Your child may be eligible for benefits under Medicaid, Medicare*, the State Children’s Health Insurance Program (SCHIP), or the Children with Special Health Care Needs (CSHCN) provision of the Social Security Act. Parents and caregivers can visit the Web sites for these entities to check eligibility requirements. Easter Seals and other non-profit organizations provide services, education, outreach and advocacy so that people living with autism and other disabilities can live, learn, work and play in their communities. Corporations can be helpful, as well. MassMutual offers free resource guides, including a directory of organizations with information for people having disabilities and other special needs. Working with a Special Care Planner, who is aware of available resources and how to coordinate them, is advisable. For more information, families can visit www.massmutual.com/specialcare where they can order the following four free financial guides:
§ Making Plans: a financial guide for people with Down syndrome and their families
§ Resource Guide: for people with disabilities and other special needs
§ With Open Arms: a financial guide for families with disabilities
§ Letter of Intent: a letter of intent template for families to begin developing/supplementing life-care plans
§ Gift Guide: for giving gifts to children having special needs to avoid the risk of losing government funding
For a free consultation call Gwen Faulkner at 856-673-4045 or email her at Gfaulkner@finsvcs.com
Visit us on our website at www.Faulkner-Financial.com
*For more information regarding benefits provided by Medicare or Medicaid (Medi-CL in California), visit www.cms.hhs.gov. Medicaid guidelines vary by state. Contact your local Medicaid office for details.
The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. MassMutual and its subsidiaries had more than $500 billion in assets under management at year-end 2007. Assets under management include assets and certain external investment funds managed by MassMutual’s subsidiaries. Founded in 1851, MassMutual is a mutually owned financial protection, accumulation and income management company headquartered in Springfield, Mass. MassMutual’s major affiliates include: OppenheimerFunds, Inc.; Babson Capital Management LLC; Baring Asset Management Limited; Cornerstone Real Estate Advisers LLC; The First Mercantile Trust Company; MML Investors Services, Inc., member FINRA and SIPC (www.finra.org and www.sipc.org); MassMutual International LLC and The MassMutual Trust Company, FSB. MassMutual is on the Internet at www.massmutual.com.