DelGallo.com Wealth Management Essentials - A Research Perspective on Life Planning and Monitoring For Families with Children or Dependents with Special Needs
LEONARD J. DEL GALLO JR., M.S., MPASsm, CFP®
(www.DELGALLO.COM) Del Gallo Financial Services, LLC
A disability can have a dramatic impact on all family members. According to the 2003 U.S. Census, over 77 million Americans, or more than 27 percent of the U.S. Population were disabled1. It is critical for families to prepare for unforeseen events1. “Statistical studies indicate that a significant portion of the adult population provides care for chronically ill, disabled, or aged family members” 1. As result, families and planners need to review estate plans, multi-generation family issues, government benefits, trusts, and life planning issues1.
Disability is defined as the inability to do
something, deprivation, or lack of physical, intellectual or emotional capacity4.
Disability has been defined, at times, as an environmental problem, whereas
other teachers define the term as a person-centered problem or deviation from
the norm6. A person with a disability could be considered having a
special need and learning to take care of this need, for a caregiver, can be
like waking up in a different country without the ability to speak the language1.
The learning process can take time. A Certified Financial Planner® professional,
with expertise in special needs planning, can also guide families through
government and community assistance programs to educate them in the fundamentals
of the system1.
Family resources can be dependent on the level of
family income. Families with children or dependents with disabilities are often
facing poverty or severe stress on their budget2. “There are an
extensive number of educational impacts related to poverty, but the one we will
highlight here is the capacity of families from poverty backgrounds to attend
school activities and teacher parent conferences” 2. A common
misconception is that parents who are not active attending events may lack
interest in their child but it may be due to the lack of financial resources,
transportation, self-confidence, or inability to get time off from their job2.
A family that is living in poverty is more likely to have a child who is late
developing vocabulary, lower IQ, and lower reading level2. Financial
planning may help families avert poverty and reduced access to resources1.
Parents are not alone in the responsibility of
caring for a child or dependent with a disability. Grandparents are
becoming primary caregivers across all ethnic groups and socioeconomic
backgrounds5. Grandparents who are taking care of children without a
parent present may be on a fixed income and 33.9% are living below the poverty
level5. Planning can minimize the stress, physical health concerns,
isolation, anxiety, and depression faced by many grandparents who suddenly find
themselves as caregivers for a child with a disability5. Grandparents
require a broad range of resource information in addition to transportation,
behavior, funding, insurance, community, medical equipment, medication,
housing, education, and skill development5. A well written financial
plan for the family, including provisions for special needs, may prepare a
caregiver to help a child or dependent with a disability. One study demonstrated
that once grandparents receive specific information to answer their questions
they are better able to meet the needs of their grandchildren with disabilities5. “Many
grandparents have assumed parenting roles at great personal expense, filling a
great family and community need; with needed supports, the grandchildren in
their care, those with special needs and their typically developing siblings,
will make progress and have successful lives” 5. Grandparents and
siblings as primary and secondary caregivers are significant and can increase
under certain economic and social conditions, while the stress and concerns can
be reduced with appropriate planning and education at all stages in
life5.
Financial planning can help each family member by
eliminating or reducing the financial burden and legal struggles that can occur
during or after a disability is discovered1. A Certified Financial
Planner® professional can help by coordinating assets, documents, programs, and
benefits1. Nonprofit organizations, websites, medical professionals,
and other resources can also provide information to minimize economic hardship
and personal exhaustion for caregivers1.
Planning for the lifetime of a child or dependent may
involve; government programs, wills, trusts, guardianship plans, letters of
intent, risk management techniques, and communication among family members3. “A
conventional estate plan will rarely meet the needs of an individual with
disabilities and may even prove to be detrimental by causing a loss of federal
and state assistance, residential services, or health care benefits” 3.
It is critical that families obtain and maintain eligibility for benefits to
provide financial and medical stability for the disabled individual during
their lifetime1.
The two major federal programs that provide monthly
income to the disabled are Social Security Disability Insurance and
Supplemental Security Income and receiving eligibility can be an arduous and time-consuming
process1. Once a disabled individual is eligible and receives either
Social Security Disability Insurance or Supplemental Security Income, they will
be offered either Medicare or Medicaid which are both government offered health
benefit programs1. Medicare is offered in coordination with Social
Security Disability Insurance and Medicaid is offered in coordination with
Supplemental Security Income1.
A will is a legal document that is created to
determine how your estate is divided, identifies a guardian for minor children,
and prevents the laws of the state from being the only method for dictating how
your estate is distributed3. Parents are guardians of their children
but once the child becomes an adult, legal status vary by state, a parent must
be appointed by the court to continue as a guardian and this legal process may
be executed at the local Clerk of the Court prior to a child becoming a legal
adult3. If all remaining guardians were to die, the will, would
identify a successor guardian for the court to consider3. Within the
will, families may use exclusion, disinheritance, direct bequests, and morally
obligated gifts as a few of the possible methods for estate distribution3.
Many options exist to pass financial resources and families should investigate
all the option available with their planning professionals before deciding on
the best plan for their family3.
A trust is a flexible and efficient way to manage
the assets of a family both during a lifetime and upon death3. A
support trust and supplemental needs trust are two different types of trusts
that are predominantly used for individuals with disabilities and can be most
beneficial if created during a parent’s lifetime3. A support trust
is utilized for any need of a beneficiary but is likely to disqualify an
individual recipient from government benefits3. A supplemental needs
trust if properly written will not disqualify an individual from government
benefits and is designed to supplement, not supplant, government benefits and
the trust cannot make a direct payment to the beneficiary or use trust assets
for basic needs like food, clothing, and shelter3. A supplemental
needs trust is used to purchase goods and services to enhance the beneficiary’s
life and can be used to provide vacations, computers, companions, and other
extras to enhance the quality of life for a disabled beneficiary3. A
supplemental needs trust when properly written and managed is an exempt trust
that requires the disabled person to have no access to the assets while funds
within the trust can only be used for supplemental expenses that Social
Security Income and Medicaid do not cover1.
The trustees and successor trustees are the
individuals who are responsible for managing the trust and should be chosen
with great care1. Corporate trustees are an option to consider when
family members need help, filling a role of final successor trustee, or used in
cases where no other individual or agency is suitable1. Fees and
costs can vary depending on the services selected with a corporate trustee,
time spent to review distributions, and other options selected to safeguard
benefits1. An attorney who specializes in creating supplemental
needs trusts should be used along with a Certified Financial Planner®
professional who can provide appropriate resources to help the caregivers upon
the death or incapacitation of the parents1.
A letter of intent is a not a legal document but an
important part of the future planning for a child or dependent with a
disability and a resource for a care provider3. The letter of intent
will describe the history of a child, current status, hopes, dreams, goals,
schedule, records, and insight into the needs of a child3. The
letter may be placed on a computer to modify at least annually and should be
accessible for all care providers3. A letter of intent should detail
all aspects of the child’s life; history; future desires; housing/residential
care; educational needs; employment history; medical care and management;
behavior management; social environment; and religious environment3.
There is no limit to the amount of information contained within a letter of
intent and many families will provide a video to go along with any written
documentation3.
Planning is critical as families try to adapt to a disability in a household, the variables change; the age; health status, needs of the disabled person, availability of insurance programs, government funding laws, availability of support programs, and employment, are a few examples1. Trusted and competent advisors can provide direction, pinpoint obstacles, and provide solutions1. “Disability knows no limits of age, background, or occupation” 1. Life planning takes time to complete and monitor but every family should explore and address all aspects that apply to their child or dependent with special needs so no critical detail is missed1.
Any questions please contact Del Gallo Financial Services, LLC by visiting our website at http://www.delgallo.com/ Del Gallo Financial Services, LLC can arrange an educational seminar or workshop for your organization’s members and/or employees. This research commentary is intended to educate families so they may gain an introduction to a difficult planning topic and is not intended for any other purpose. Articles created by Len Del Gallo Jr., may not be copied or used without written permission from Len Del Gallo Jr. Please note that some information may be protected by copyright laws. Del Gallo Financial Services, LLC and its’ representatives do not provide tax or legal advice. Please consult your tax advisor or attorney for guidance on such matters and before implementing any strategies and/or updates to your planning. Del Gallo Financial Services, LLC is a Registered Investment Advisor and Licensed Insurance Agency.
Works
Cited
1. Stone,
Constance A. “In the Blink of an Eye: Special Needs Planning.” Journal of Financial Planning.
Oct. 2006: Vol. 19, Iss.10: 64-74. Print.
2. Turnbull,
Ann, Rud Turnbull, Michael L. Wehmeyer. Exceptional
Lives Special Education in Today’s Schools. 5th ed. Ohio: Merrill
Prentice Hall, 2007. Print.
3. Dixon,
Beth. Planning For The
Future For Your Loved One With CdLS. CdLS-USA Foundation. Cornelia
de Lange Syndrome Foundation, Inc. n.d.Web. 23 Mar. 2006.
4. College
for Financial Planning® University Library. “dis·ability” Merriam-Webster’s Third New International
Dictionary Unabridged. N. pag. 2002. Web. 14 Jun. 2010.
5. Gallagher, Peggy A., Karen Kresak, Cheryl A. Rhodes. Perceived Needs of Grandmothers of Children With Disabilities. College for Financial Planning® University Library. ProQuest. Topics in Early Childhood Special Education. Austin: May 2010. Vol. 30, Iss.1: 56-65. Web. 14 Jun. 2010.
6. Carter, Nari, et al. Educators’ Perceptions of Collaborative Planning Processes for Students With Disabilities. College for Financial Planning® University Library. ProQuest. Preventing School Failure. Washington: Fall 2009. Vol. 54, Iss.1: 60-71. Web. 14 Jun. 2010.
Leonard J. Del Gallo Jr., Broker Associate in Connecticut & Florida
CT Managing Broker: Berkshire Hathaway HomeServices N.E. Properties
www.bhhsneproperties.com
Office: 172 West Main Street
Avon, Ct. 06001
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