Unique Planning Issues Face Families of Children with Special Needs
Jul 30, 2019 08:44AM
By Vanessa Orr
Parents never stop worrying about their children, and this is especially true in families that have children with special needs who might require ongoing care long after their parents are gone.
“I’ve been working with special needs families for more than 15 years, and the one recurring theme I hear from parents is this: ‘I’ll take care of my kids as long as I draw breath, but what happens when I’m gone?’” explained Financial Advisor Bob Corcoran of XXI Century Financial.
“I pride myself on being a resource for my clients—to connect them with the folks that can help them, whatever they need,” he added. “But the area where I can make the most impact for those families is to provide answers to that overriding question: ‘What happens when…?’”
According to Corcoran, parents of children with special needs face unique planning issues, ranging from whether their children will be able to live independently to how to ensure compliance with Medicaid’s eligibility rules. It is especially important that the professionals that they work with, such as lawyers and financial advisors, understand the family’s priorities and have the experience to ensure that their desires are met.
“Special needs parents and ‘typical’ parents share a common goal: to see their children live happy, fulfilled lives,” he said. “They may define ‘quality of life’ differently, but the desire is the same.”
While many families want to plan ahead for their children’s futures, it often comes as a surprise to parents of children with special needs that there are people who specialize in this area of planning. Working with professionals who have this type of knowledge and experience can help make more complex issues, such as Medicaid, more understandable and help families avoid making costly errors.
“One of the major issues from a financial planning standpoint is that these children, when they reach adulthood, need to be Medicaid qualified; otherwise, they may not have access to health insurance,” said Corcoran, adding that once they reach legal age, these individuals may no longer be covered by their parents’ insurance.
“Families need to be aware of their countable vs. non-countable resources for Medicaid eligibility—for example, we wouldn’t open a college 529 plan for an individual with special needs, or open a Uniform Gift to Minors account, because those are countable resources. We would instead talk about trusts and ABLE (Achieving a Better Life Experience) accounts.”
Modeled on 529 savings plans for higher education, ABLE accounts can be used to pay for qualifying expenses of the account beneficiary, such as the costs of treating the disability or for education, housing and health care, among other things.
Attorney Megan Loftis also specializes in helping families of children with special needs. “While helping these clients with estate planning, I was often asked how they could support their children in the future—they knew they couldn’t give their children the money directly, but wanted to provide something to cover their care once they were gone,” she explained.
Depending on a child’s age, there are different factors to consider. Because minors can’t have money in their own names, parents need to determine who will become guardians for their children and handle their finances. When children become legal adults, there are other issues to resolve, such as the fact that they have aged out of specialized programs or schools, and that they are now considered legally responsible for their own health care.
“Many parents don’t realize that if their 18-year-old son or daughter goes to the hospital, they are no longer in charge of their child’s care, even if that child can’t communicate his or her needs,” said Loftis.
For this reason, families need to establish guardianship so that they can legally handle financial and medical decisions. They also need to plan for the day when they are no longer around.
“Depending on the family dynamic, if a relative can handle the estate, the court tries to rely on their discretion,” said Loftis. “They still need to go through the guardianship aspect. If the child has inherited money, there are also special needs trusts that can be funded in a number of different ways to help pay for that person’s care.”
Finding the Right Advisor
One of the best ways to find a person who specializes in this area is to use the Academy of Special Needs Planners (ASNP) as a resource. The organization provides a wealth of information about issues important to special needs families and provides a list of locally recognized advisors.
“Experience is extremely important in this area; when you go to a lawyer, you don’t want to just ask if they can write a special needs trust,” said Corcoran. “Instead, ask them about how many trusts they have done. Ask if they provide workshops, or otherwise work with special needs organizations.”
Corcoran often provides workshops for local school districts, and attends events geared toward special needs families. He most recently hosted presentations for parent support groups at North Allegheny and Cornell school districts. He is also a founding board member and is currently secretary of TC House, Inc., a home built for young adults with Down Syndrome.
“After attending a presentation about helping families of children with special needs, I realized that I could spend the rest of my days making rich people richer, or make a real difference in people’s lives,” said Corcoran of his commitment to these clients. “The decision was clear.”
In addition to finding the right legal and financial professionals, it is also wise for parents to connect with others who have children with special needs, as well as organizations specifically geared toward helping these types of families.
“My advice to any parent is that the more people you have supporting you, the easier it will be on your family going forward,” said Loftis. “Find as many resources to help as possible.”
To find professionals who specialize in this area, as well as many other resources, visit https://specialneedsanswers.com.