A lot of us parents like to put our hands over our ears and shout LA LA LA LA LA when asked to think about formulating a life care plan, because that means we're envisioning the future of our children with special needs without us at their sides. But denial and avoidance do both us and our children a disservice. The time to think about planning for our children's future is now -- the earlier we start, the more comprehensive our planning will be. And the steps involved are both more involved yet less daunting than you may think.
The following summary is based on a 2010 SEPTAR.org presentation on Financial Planning and Your Child's Future, given by Nick Homer, a Special Care Planner from MassMutual's general agency in San Jose, Miceli Financial Partners Wealth Management and Insurance Services (MFP). While the following information is critical, it is not official advice but rather a primer on how to get started and what to look for. Once you're ready to take action, you should consult with professional special needs financial planners, and lawyers who specialize in special needs trusts.
What is a Life Care Plan?
Life care plan: takes into consideration the life, needs, and goals of people with special needs. Its about taking care of an individual with a disability after their parents are gone, and ensuring quality of life for that individual and their remaining family in all areas of life.
The goal is to create a flexible roadmap for the person in question's life: If any new therapies, medications, government benefits, etc. emerge, the plan needs to be able to adapt.
Misconceptions About Planning for Your Child's Future
"It's not affordable."
But if you sit down and talk, that is helpful. Many special needs financial planning agencies do not charge fees for preliminary consults and advice."Someone will help financially."
People who are waiting for a benefactor will put their faith in grandparents who say, "Don't worry about it, we have money, property, business, we'll take care of your child." So people don't plan for the unexpected, like a parent with stroke or Alzheimer's who then needs to direct their assets towards their own care. If that happens and you haven't done planning for your child because you were waiting on grandma or grandpa, you've lost a lot of time."Trust accounts are only for the wealthy."
But anyone who owns property or has assets can set up living trust that avoids probate and allows your assets to be passed onto your heirs."Everything will be taken care of in the will."
A will is an important legal asset, but it only says what will happen to your assets at death, who be the guardian of your children, and who will be the custodian of your money (guardian and custodian are not always the same person)."Siblings will provide care."
Sometimes parents leave everything to a typically developing sibling, assuming they'll take care of their sister or brother with special needs. But what if sibling isn't financially savvy, or falls in with someone who's not financially savvy? Or get divorced and the ex takes half of the money intended for the sibling with a disability?
Components of a Life Care Plan:
- Life care plan vision
- Letter of intent
- Financial and support services
- Special needs trusts
Ten Comprehensive Life Care Planning Steps (Money is only part of it!)
1) Address Primary Issues.
- What will my child do for schooling?
- Are we working on a diagnosis?
- Conservatorship -- lining up benefits like MediCal? What about family issues, do we have family in the area, do we have family members who "get it"?
- Need communication throughout process, discussions between legal professionals, parents, doctors, etc. will make planning process easier, so can avoid mistakes.
What you see happening with your child as they learn and grow. Some people assume their child will live with them forever. Others know that it may not be possible due to increasing behavioral challenges, strength, size.3) Choosing Guardians/Conservators
Often spouses have different ideas. Planners can help you prepare for best and worse possible outcomes (what if very best auntie marries a loser who doesn't get your kid?).4) Identifying Financial Resources
Whatever money/assets you have. 401ks, government benefits, inheritances, etc. compared to your monthly and annual costs that will recur after you die.5) Have to Plan for Your Own Retirement, As Well!
Best thing you can do for your kids is to plan to be personally financially secure in the future.6) Letter of Intent
- The personal side to the plan.
- Tells the caregiver how to step in and be the parent, take care of the child.
- Talks about what your child is like, what the caregivers will need to know, what their quirks and routines are, what soothes them, doctors, medications, therapies, allergies.
- It's not a legal, binding document, but it sets a precedent and will hold up in court.
- It's a living document and will change. Recommend that it gets update with each IEP.
- Many people keep Letters of Intent on flash drives (some medical jewelry now includes flash drive pendants).
It is a legal document that establishes who takes care of kids, who watches over the money. But it will not avoid probate, will go in front of judge, will be public information. Goes along with the trust.8) Special Needs Trust
- Designed to ensure that adult children with disabilities never get disqualified from government benefits.
- Needs to be stand-alone from any other living trust you may have.
- Trust is irrevocable in your child's name once funded. But the trust owns the assets, not the child.
- You really need to go to someone who has designed one.
- It doesn't have anything in it -- it will be funded upon your death.
- What are the criteria for establishing that a child qualifies for a special needs trust? Diagnosis is not required. All that needs to happen is parent draws up SN trust with lawyers.
- Your other children can be beneficiaries as well, or a charity if there's any surplus.
- You can gift to the trust.
- If child has more than $2,000 in their own name, they do not qualify for government benefits, and the government will seize assets and incur benefits until that money is spent down.
- Once you've gone through the process, you want to have whole-family meeting.
- Send out a letter to relatives who might designate your child as a beneficiary, saying "We're not asking for anything, but if you don't set this up the right way, it'll screw things up."
- Also make sure guardians know they're going to be guardians.
- Recommend naming a corporate trustee to handle all the financial aspects, investments, cash management, bill paying, and not the actual caretaking.
- Caretaking can be a separate legal role (where the Letter of Intent comes in).
One option for finding a certified Special Care Planner like Nick Homer is to visit massmutual.com/specialcare. Thinking Person's Guide to Autism neither endorses nor is supported by Miceli Financial Partners, Nick Homer, or MassMutual.
A version of this essay was originally published at BlogHer.com