Financial Planning And Special Needs
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Financial Planning And Special Needs

Five Do’s and Don’ts for Parents.

Special Needs Trusts. Courtesy of Google images
Special Needs Trusts. Courtesy of Google images

“Caregiver” is a familiar word as we gain appreciation for the things people do for loved ones. The term is especially applicable to those caring for someone who has special needs. Decision-making, particularly where children are the ones with special needs, is often stressful and the implications can stretch out for many years.  Whether a person is born with a disability, or acquires one later in life (due to injury, accident, disease or illness), people with special needs require what I like to call a “Life Plan.”

A Life Plan entails more than financial planning, of course, but a special needs financial plan is the underpinning, or architecture, of a solid Life Plan. A special needs financial plan is a coordinated program of future care planning, and financial and legal strategies, drawing on the skills of attorneys and tax, insurance and investment professionals. Below are a few important Do’s and Don’ts.

  1. Do not have assets in your dependent’s name

To qualify for government benefits, such as Medicaid or Supplemental Security Income (SSI), a person cannot have more than $2,000 in assets in most states. If you leave funds or convertible assets directly to your dependent with special needs, those assets may have to be ‘spent down’ to qualify for important benefits. Moreover, assets in a dependent’s name can lure predators or creditors. Law suits and spendthrift situations are other risks.

  1. But do not exclude your dependent with special needs

Many people with special needs of course rely on government benefits to help provide food, shelter, and medical care. If you have been advised to exclude your dependent to assure eligibility for public benefits, there are better ways to accomplish that objective (see # 4 below). Excluding the dependent with special needs and instead relying on a sibling or other family member to pick up the torch and become the caregiver/money manager in the future can be very risky. What if the sibling or other person passes away, gets divorced, goes bankrupts or just mismanages the funds? Moral promises may be well intended, but they are not enforceable.

  1. Do communicate your plan to family members

The best laid plans can go awry through lack of communication within the immediate and extended family. A well-meaning but uninformed relative may leave funds directly to your dependent. This may undo all the hard work and expense you have gone through in setting up a plan. A plan is only as good as its weakest link, and communication and reviews are the keys to success.

  1. Do have the right kind of trust

There is more than one type of special needs trust. A common mistake is having a “payback” provision where the state can recover its expenses upon the death of the dependent with special needs. However, this is generally unnecessary. A payback trust is used only when the trust is funded with the assets of the dependent with special needs. In contrast, a third-party trust is funded with assets from someone other than the dependent with special needs and does not require payback to the state. Any leftover assets can go to your named beneficiary.

  1. Do use an experienced special needs attorney

There are many specialties within the field of law. Having a special needs trust set up properly requires its own expertise. Only a relatively small number of attorneys understand the process and ramifications. If the trust is not set up properly, your loved one with special needs may be deemed ineligible for government benefits. The state can deny coverage for essential services if the assets in the trust are considered to be “available” to the dependent with special needs. Also, beware of trusts offered in “packages” or online. In these cases, you may truly get what you pay for. The links below provide additional information:

Academy of Special Needs Planners:

National Association of Elder Law Attorneys:

David J. Goldwasser, CLU®, ChFC®, is a Financial Planner and Special Care Planner with the Barnum Financial Group, based in the firm’s Elmsford, NY office. He can be reached at This article is not intended as legal, tax, accounting or financial advice. Securities, investment advisory and financial planning services through MML Investors Services, LLC.  Member SIPC. 6 Corporate Drive, Shelton, CT 06484, Tel: 203-513-6000. The opinions provided above are not necessarily those of MML Investors Services, LLC. The opinions provided are for general information purposes only. CRN201807-213893


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