Special Needs Financial Planning
My son is going to turn 16 this year, diagnosed with Autism in 2001 when no one really knew what it was, and health insurance companies typically covered nothing when it came to required medical or psychological attention and coverage.
He enjoys playing and managing baseball, watches lots of Yankees baseball games, and has memorized tons of the players’ statistics, he likes swimming at the pool, complex math and mind games, and is an “ambassador” at school.
It’s safe to say that his schedule is packed with activities that might, under some circumstances, be expensive. “(People ask) ‘How do I get the state to pay for this?’ or ‘I’ve never heard of the (Division of Developmental Disabilities).”
The cost of the activities children with special needs participate in, coupled with the cost of health care and additional programs can quickly add up to a mountain of expenses without support.
Because of our situation, we can sympathize with these types of situations. Life Planning Institute provides services for individuals with autism and their families, and we are familiar with the realm of special-needs financial planning.
Two major milestones
There are two major financial milestones that a family of a person with disabilities must prepare for: when that individual turns 21, and when the caregiver passes away.
Many families with children with special needs struggle with the question “what happens when I’m dead? How do I take care of him after I pass?”
The key is the proper financial planning, which alleviates stress and anxiety that parents are experiencing, and also makes sure the child has a sense of security and some dignity and autonomy.
If a caregiver dies without first setting up a will, or instructions for the care of their child with special needs, the result could be tragic.
In some cases, the courts and local jurisdictions would have to appoint somebody to represent the needs of the heirs, which in a lot of cases is not a good thing.
There are a wide range of government benefits available for a person with disabilities, depending on their needs and circumstances. Hiring a lawyer to help navigate the different types of benefits is ideal.
According to the Social Security Administration, Supplemental Security Income (SSI) is available to help the aged, blind or people with disabilities by providing cash to meet basic needs for food, clothing and shelter.
Last year people who qualified for Title XVI SSI benefits received an average payment between $660 and $662 every month, according to Social Security. Title XVI benefits encompass qualifying aged, blind or disabled individuals.
However, “resources” in the name of the person who is applying for SSI cannot exceed $2,000 for an individual or $3,000 for a couple, or else that person becomes ineligible to receive the SSI benefit, according to Social Security.
“Resources” include cash, bank accounts, stocks, U.S. savings bonds, land – excluding the home you live in or the land it is on – life insurance, personal property, vehicles, anything owned which could be changed to cash and used for food and shelter, and deemed resources.
Household goods, personal effects, one vehicle, grants, scholarships, fellowships and gifts – for a time after they’re received – do not count as resources.
The value of resources poses a problem for parents of children with disabilities, because when the caregiver dies, almost nothing can be left to the child, because the increase in resources would halt SSI benefits.
Special needs trust
Typically, what’s considered is a special needs trust. It’s a trust specifically designed for families and the needs of a (person) with special needs, which we can help you with, and is the most common route.
That way parents can leave money through life insurance or through gifts to take care of their children in their absence. Setting up the trust, although complex, is NOT a major hurdle.
According to Parents of Children with Disabilities, special needs trusts can be funded by life insurance, standard government benefits, gifts, assistance funds, inheritance, property and military benefits.
Funds from the trust can be used for transportation, home health aides, education, rehabilitation, computer equipment, and medical and dental care not provided by government benefits.
Funds from the trust cannot be used for food, housing, property taxes, home insurance utilities, or transferring cash to the benefactor.
Then, somebody needs to be chosen to look after the trust.
You can set up agencies to do it, but we suggest a family member or somebody who knows and loves your child to look after the trust.”
In conjunction with setting up the trust, some caregivers struggle with is determining who will look after their child and his or her trust. We can help with that decision.
In some cases families don’t want to burden siblings with the care of the individual with special needs. Depending on a family’s financial state, professional caregivers and advisers could be appointed to be responsible for an individual’s care, if other family members or unable or unwilling.
The second milestone is the 21st birthday.
At 21, the services stop, and although the child can stay in school until 21, they then go to adult services, and everything changes.
There is no easy answer, and it is hard. There are no entitlements, and there are waiting lists in some cases. You really have to research and know what you’re looking for. My son’s needs are really different from any other another child’s needs. Twenty-one is a huge issue.
At 21, an individual’s support from the state Department of Children and Families (DCF) ends, and they must apply for support from the State Division of Developmental Disabilities (DDD). This is something that you have to stay on top of, because the state doesn’t just do it.
Furthermore, some parents have to consider where their child will spend the day. It’s likely that they’ll have to register for a day program, if that individual isn’t fully independent.
There are many resources to help parents navigate the spheres of benefits and services that available for families, however they must be sought out.
For example, DCF pays in some cases for a child to attend summer camp for free at the YMCA, but that is a service that isn’t widely known.
Although the financial issues are daunting, they need to be tackled early. We can help. Give us a call to schedule an appointment to discuss these matters, and more.