Financial Planning for Children with Special Needs

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SPECIAL NEEDS PLANNINGA presentation for parents and caregivers of children and adults with special needs

1rsteenlaw@gmail.com

SPECIAL NEEDS PLANNINGPrepared by Randy Hope Steen,

Esquire

The Law Office of Randy Hope Steen

403 S. Bonsall RoadCoatesville, PA 19320T 215.570.0047rsteenlaw@gmail.comwww.rsteenlaw.com

What is Special Needs Planning?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

Public Benefits may include SSI, Medicaid, Section 8 Housing, and other federal or state sponsored assistance programs based on financial need

Potential Advantages of a Special Needs Trust

Protects assets

Maintain a home

Protects the disabled beneficiary

Covers additional services/therapies/equipment

A Special Needs Trust Can Help Pay For…

Personal attendantMedical goodsDental careSurgery or medical

procedures Private rehabilitation Psychological support

Home modificationsStamps and writing suppliesDrug and alcohol treatmentRecreational/cultural

experiencesAdditional therapies/activitiesEnrich quality of life

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What are 2 Basic Requirements of Special Needs Trusts

Trustee has total control over the monies inside the Trust

The child/dependent can have no power, authority or control over the Trust

Who would be the Trustee?Depends on the

specific issues in the situation/estate

A trusted family member(s), friend(s), a corporate fiduciary, bank, trust company, or a combination of an individual, and corporate fiduciary serving together

What qualities are important in a Trustee?Good heart

Shared values

Financially savvy

Advocate

Resolved

Organized

A Trustee who will follow your wishes as outlined in your Letter of Intent

You do not have to have one person shoulder the responsibility alone.

WHAT ARE SPECIAL NEEDS PROVISIONS?

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

Where do I put these Special Needs Provisions?

Last Will and Testament, or in a separate Special Needs Trust

3rd party Special Needs Trusts, are not considered an available resource for Medicaid, governed by 42 U.S.C Section 1396p(d)(3)(B)

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)

All issues in estate determine placement10rsteenlaw@gmail.com

Who Prepares The Special Needs Trust Provisions?

Attorney who routinely prepares Special Needs documents

Placement of Special Needs provisions

Flexibility in document provisions

Is it expensive? This is critical

planning that should be considered!

Cost of preparing a Last Will and Testament, which you need anyway

Cost of a separate trust varies from attorney to attorney

Must be Attorney experienced in drafting Special Needs Language

Team Approach from your Advisors

How to determine how much is needed to fund a Special Needs Trust?Current cost of care

Future Costs/Life Expectancy

Benefits

The unknown

Life Care Plan

How much is needed to fund a Special Needs Trust? What are the basic housing

costs?

Custodial care? Nursing services?

Personal Needs?

Transportation costs?

Clothing?

Job Coaching?

Entertainment?

Prescription Drugs? Over the counter drugs?

Meals?

Additional Education?

Tuition? Books?

Special Equipment?

Service Animals?

Therapies?

Where do I get the money to fund the Special Needs Trust?

Gift existing assets

Leveraging wealth

Examine Finances

Review all Parent’s and Grandparent’s assets

No funds outright from anyone

Check beneficiary designations

Choose the right assets for the trust

What are the pros and cons of funding the trust with assets I have?

Pro’sWealth exists

No funding costs

Con’sLose control of

assets

No money left

What are the pros and cons of purchasing life insurance?

Pro’s Leverage wealth Cost effective Generally Creditor

Protected Asset Gifts of premiums using

Annual Gift Tax Exclusion Income and Estate tax free

death benefit Tax deferred basis on

growth Estate equalizationCon’s Pay premiums

The importance of planning today

TAKE CARE OF IT NOW!

Life is unpredictable

Peace of Mind

Everyone needs a Will

Appointing Guardians

Quality of life

Enrichment of life

WHAT IF YOUR CHILD HAS ASSETS OF THEIR OWN?

Lawsuit proceeds, gifts, inheritances, etc.

Self-Settled Special Needs Trusts

Medicaid Payback

SPECIAL NEEDS POOLED TRUST ACCOUNTS

Established by a nonprofit charitable organization for the disabled beneficiaries regardless of age

Beneficiary can add their own assets

Beneficiary who is 65 or older must have a formal finding of disability under Social Security to qualify

Funds are pooled together

When used?

Medicaid payback

CHARITIES AND SPECIAL NEEDS PLANNING

Charitable Trusts and tax deductions

How it works

No Medicaid Payback

For the beneficiary’s lifetime

Leave a legacy

Leave a Legacy-Giving Back to Charity

Give back to charities

How gifts can be made

Life Insurance

Income and estate tax deductions

Scholarship Funds

Endowments

Other Things To Think About… Life Care Plan

Letter of Intent

Early Intervention, and the Intermediate Unit

IDEA-Individuals with Disabilities Education Act

IEP-Individualized Education program

Financial Planning

All financial goals

Getting the right attorney

Team Approach

What is a Life Care Plan? A plan for the special needs beneficiary’s life

Quality of life

Seizing opportunities and leveraging funds

System of accountability of trustees

Do not depend on other family members to take care of your child

Addresses savings goals

Life Care Planners and Special Needs Planning Attorney’s assist and guide you in preparing this

What is a Letter of Intent? NOT legally binding

Provides direction

Provides specific wishes

Details medical condition, history, medications, doctors, therapists, daily care needs and routines, social needs, emotional well being, housing, services, etc.

Snapshot of a day

Normally drafted with the assistance of Attorney and/or Life Care Planner

HELP…Early intervention 0-3yrsThe Intermediate Unit 3-5 yrs

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

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

WHAT SHOULD I DO NEXT?Meet with Financial Professional. Do not wait until

you get organized to do this, a good financial professional will help you get organized

Retain an attorney experienced in drafting Special Needs documents

Team Approach

Do not put off getting your planning in order, none of us know what the future holds

If You Have Additional or Confidential Questions…

The Law Office of Randy Hope Steen403 S. Bonsall RoadCoatesville, PA 19320T 215.570.0047Fax 610.857.1550rsteenlaw@gmail.comwww.rsteenlaw.com

rsteenlaw@gmail.com

Financial Planning for Children with Special Needs

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