4 minute read
FINANCIAL FOCUS ENSURING YOUR EXCEPTIONAL CHILD’S NEEDS ARE ALWAYS MET WITH A FINANCIAL PLAN
By Ryan F. Platt, MBA, ChFC, ChSNC, CFBS
2022 IS UPON US. A NEW YEAR IS ACCOMPANIED BY OPTIMISM CLOTHED IN HOPE AND GROWTH. A NEW YEAR ALSO ARRIVES WITH EXPECTATIONS OF IMPROVEMENT FROM THE YEAR BEFORE, WITH ACTIONS ON PROJECTS THAT WERE STARTED OR MAYBE NEVER QUITE GOT OFF THE GROUND. IT IS A TIME TO REFRESH, RENEW, AND ACT.
Planning for your child’s future, or refreshing an existing plan, is one of those areas to act on as the new year begins. Let’s take some time to discuss the areas of special needs planning so you can start with a solid foundation. I suggest that special needs planning is 90% financial planning and 10% legal and estate planning. Before I start an argument with this statement, let me explain my reasoning. It is understood that a Special Needs Trust (legal) is critical to a special needs plan because, without that tool in place, your child will lose access to government benefits.
For most adults with a disability, government benefits provide financial resources or services that save families from having to devote their family finances to the payment of those services. This fact means your family must financially plan appropriately in order to have the proper financial structure in place to qualify for these benefits. In addition, as many families know, government benefits do not provide for all of an individual’s needs, which means parents must define their child’s lifetime needs, project the cost of those lifetime needs, determine the items government benefits do NOT provide, and then financially plan to ensure those needs are still met. Ensuring your child’s needs are always met intersects with your financial plan because if your financial plan does not work (you run out of money before you run out of life), your child’s plan will not work either. If you run out of money, then no amount of legal planning will make a difference because you need money to fund legal tools, like a Special Needs Trust. A parent’s financial plan linking to a child’s financial plan is critical in the area of generational asset flow. It is imperative to understand the dollar amount an individual with a disability will need up and above government benefits so that a proper division of the parents’ estate can be decided. For example, if parents have two children and one child has a disability, after calculating the lifetime needs of an individual with a disability, considering government benefits, and understanding the parents’ financial situation, it may indicate that the child with a disability should receive 65% of the parents’ assets when they die, and the child without a diagnosis receive the remaining. This determination would then need to be included in the parents’ will (part of legal plan), but without that calculation and without that comprehensive financial plan, the typical 50/50 split in wills would be wrong, leaving the child with more support needs without the necessary financial wherewithal.
Another area of the financial plan that will be critical to providing enough resources for a child with disability is tax strategy. This type of tax strategy is linked to the parents’ financial plan because the type of accounts the parents use to save their money for their retirement will more than likely be the same accounts that will end up funding their child’s Special Needs Trust (providing for the lifetime support needs of their child). The reason this is important is because of the way taxes work inside of a Special Needs Trust. Certain accounts parents will pass to the Special Needs Trust at their death will be taxed at a relatively high tax rate inside the Special Needs Trust, which means less money will be available for their loved one’s support needs.
Financial planning is the foundation for your special needs planning because a well-done and comprehensive plan will provide the direction needed to make appropriate decisions
in regards to asset splits, accounts to save parents money, proper language utilized in legal documents, beneficiary designations, and preserving the ability to qualify for government benefits.
As 2022 begins, search out a special needs financial planner and a special needs attorney to ensure your plan works for your entire family—you and ALL your children. Please feel free to visit www.ASpecialNeedsPlan.com to download our guidebook on special needs planning or contact us to find out how to select professionals that specialize in planning for families like yours! Contact a financial advisor who specializes in serving families with special needs for more information on how to prepare for the future. The team at A Special Needs Plan is driven by their purpose of Leading Families to Independence through an ongoing, multi-generational plan. We are passionate about families confidently moving forward.
Ryan F. Platt, MBA, ChFC, ChSNC, CFBS, is a registered representative of and offers securities, investment advisory, and financial planning through MML Investors Services, LLC, Member SIPC. A Special Needs Plan isn’t a subsidiary or an affiliate of MML Investors Services, LLC, or its affiliated companies. This article is not a recommendation or endorsement of any products. Website: http://www.aspecialneedsplan.com Phone: 704-326-7910 Location: 101 N. McDowell Street, Suite 120 Charlotte, NC 282
