What Does This Article Cover?
- What kind of government aid is available to assist with caring for individuals with special needs?
- What is a special needs trust?
- What should I consider when choosing a special needs professional?
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It's a maxim of parenthood that having
a child changes your life. Having a
child with special needs brings added
challenges and unique joys. It also
brings complex financial and
emotional concerns — for parents,
siblings, guardians and other loved
ones of those with special needs.
15% of American adults qualify as
having a disability, as do 6.1% of
children under the age of 18. This
translates into 42 million adults and
4 million children with special needs
that almost always will stretch over
the course of their lives. And while
social attitudes towards disability have
changed and grown more accepting,
resources for loved ones remain
scarce.
What You Need to Begin
So where do you start as you think
about providing for a loved one with
special needs? A basic check–list of
"to dos" can help organize immediate
goals and provide a framework, no
matter what the age of your loved
one. The Special Needs Network,
a non–profit group providing
professional services to special
needs families, suggests the
following:
- Apply for all state and federal
government programs on behalf of
family members with disabilities.
- Make certain that when you pass
away there will be adequate funds
available to provide for family
members. Be sure to properly
safeguard assets so that
government benefits will not
be jeopardized or depleted.
- Designate in writing an advocate/
guardian for children or family
members in the event of your
death.
- Select future living accommodations
for aging and/or loved
ones with a disability.
- Prepare a Letter of Intent for the
individual who will be providing
for any family members when you
are no longer able to do so.
Financial Provisions for
Loved Ones
Government Aid The financial
demands of any specialized care may
be immediate and intimidating. They
may be even more so if one parent
or spouse must leave the workforce
to care for a loved one with special
needs. Therefore, exploring federal
and state programs is imperative.
The National Institutes of Health
(NIH) provides significant resources
and informative links on their
web site, www.nih.gov.
Additionally, the Social Security
web site, www.ssa.gov, provides
information and a comprehensive
guide of programs available, their
guidelines and eligibility and how
to apply for benefits on behalf
of a special needs adult.
Medicaid and Medicare may also
be options, depending on the
severity of the disability. Medicaid is
designed for those people meeting
strict income eligibility requirements
and, while federally subsidized, it's
state administered. Medicare is run
by the Social Security Administration
and may pay the health costs of
people older than 65, as well as
those younger than 65 who have
received Social Security benefits for at
least two years.
Anyone considering federal programs
must be aware that the asset cap —
applicable to the special needs individual
— is $2,000. Because of these
asset limitations, guardians must
make any family member — aunt,
uncle, sibling, grandparent — aware
that financial bequests, through wills,
gifting or life insurance beneficiary
designation, can compromise an
individual's ability to receive
federal aid.
Family Financial Planning
Fortunately, there are solutions
to asset–limit challenges, such as a
Special Needs Trust. This is why
any asset limitations should not
deter parents from establishing basic
financial contingencies within a legal
framework.
A Special Needs Trust may help
alleviate financial and quality–of–life
concerns without rendering your
loved one ineligible for federal and
state aid. Such a trust — indicated in
your will — can be funded through
assets such as stocks, real estate and
bank accounts. In addition, for those
with limited assets or guardians who
want to ensure that a trust has more
than adequate funds, a life insurance
policy can also be used to fund a
Special Needs Trust, if you name
the trust as beneficiary. When the
policyholder passes away, the death
benefit of the policy and any other
assets indicated would revert to
the trust, which can be used as an
income source for your loved one's
expenses. A trustee other than your
loved one must be named who can
manage the trust.
When considering methods to fund
the care of an individual with special
needs, familial financial situations
must be carefully reviewed by an
attorney specializing in special needs
law. All beneficiary designations need
to be reviewed and, if necessary,
changed to specify the trust.
Choosing a Special Needs
Professional
Developing a comprehensive plan
for the care of an individual with
special needs requires a careful
choice of professionals, be they
lawyers, accountants, health
professionals or insurance agents.
Because of the complexity involved
in developing a Special Needs Trust
and evaluating familial assets, any
professional you contact should
have the following:
- Experience in special needs
planning, with references
available.
- An understanding that both
federal and state laws affect the
drafting of special needs trusts.
- Knowledge of all types of
available government benefit
programs, especially Supplemental
Security Income (SSI), Social
Security Disability Income (SSDI),
Medicaid and Medicare.
- An understanding of state–specific
Medicaid benefits.
- A knowledge of the fundamentals
of estate planning, including wills,
trusts, powers of attorney and
healthcare proxies.
- An up–to–date understanding
of recent changes in estate tax
laws that could impact planning.
- Advocacy referrals to assist clients.
Assessing the Costs of Care
A knowledgeable professional
should also be able to help
determine the anticipated costs
associated with the care of an
individual with special needs
based on variables determined
by his/her parent or guardian,
including:
- An individual's ability to function
and/or work independently.
- The desired lifestyle for child
and summary of attendant
monthly expenses that would
go uncovered by government
programs or private insurance.
- Future monthly housing,
educational, recreational and
medical costs.
- A cost estimate of anticipated
additional support and finances
needed, such as counseling or
advocacy services.
- Government benefit eligibility,
likely duration of eligibility and
expected aid amounts.
Guardianship and Care of
Individuals with Special Needs
Guardianship is another pressing issue
for people currently caring for an
individual with special needs. Often
siblings, aunts or uncles, or the child's
grandparents are the first choice.
Guardianship, however, requires a
substantial amount of consideration.
Guardianship practices vary by state,
and there is no unifying federal
guideline on which to rely.
Additionally, depending on state specific
guidelines, guardianship
may result in a special needs adult
losing any right — even limited —
to self–determination regarding
medical care, housing choices, etc.
A lawyer specializing in family law,
therefore, should always be
consulted and draft any binding
document.
A Letter of Intent, drawn up by
the parent or guardian of a special
needs individual, comprises
instructions to a trustee or guardian
regarding the type and level of care
you would want provided and can
include specifics about health care,
education and living arrangements.
While not a legal document, Letters
of Intent should be witnessed and
notarized.
Allaying Concerns
Caring for an individual with special
needs requires patience, dedication
and, sometimes, unique skills.
Ensuring the continued well being
of your loved one, in the event you
are no longer able to provide care, is
one of the most important steps
you can take. By laying the
groundwork early and taking
advantage of available resources,
you can minimize the worry of
caregiving and enjoy its rewards.
Questions about this article or about New York Life, our subsidiaries and products that we offer? Please call this toll-free number 800-710-7945 (x951) to arrange for a discussion with a New York Life agent or a NYLIFE Securities financial services professional.
This material is for informational purposes only. Neither New York Life nor its agents provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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