What is so special about working with families who care for individuals with special needs? The question is personal for Melissa Weisz, a wealth advisor and associate partner at Corient Private Wealth in Morristown, N.J. Her oldest son is on the autism spectrum. Taking care of her son's current needs and securing his financial future takes up a large part of Weisz's daily attention.
All that fierce advocacy extends Weisz's effectiveness as a wealth advisor and source of hard-to-get information for her clients. As a Certified Special Needs Consultant at Corient, Weisz focuses on the unique financial requirements and planning challenges of families caring for individuals with special needs. “The challenge of preparing for lifetime protection for a family member or loved one with special needs is overwhelming,” says Weisz. “I'm living the all-encompassing complications that families with complicated lives face.”
Need meets opportunity. According to the Centers for Disease Control, a quarter of the US population—61 million people—has a disability that makes independent living difficult or impossible. For families of people with such special needs, intergenerational financial planning is often a full-time undertaking.
For counselors serving a family committed to securing the long-term future of an individual with special needs, the first challenge is reframing the relationship. In traditional plans, advisors focus on clients' retirement. When clients have children, there is an expectation that the children will start and, at the very least, be able to live independent lives and that financial support or gifts will be free.
Planning for individuals with special needs requires preparation not only for clients' lifespans, but also for managing the financial assets of individuals who, thanks to advances in health care, may outlive them.
Practices focused on special needs planning
A small but growing number of counselors are focusing on special needs planning. Caleb Harty, founder and principal of Andover, Mass.-based Harty Financial, was introduced to the specialty in 2011 when he helped a colleague whose son was diagnosed with autism and later a brother-in-law with a child born with the syndrome. Down. “I was alarmed that the families who most needed a plan to care for a child with special needs didn't really have a strategy in place for how estate planning, financial planning and public benefits intersect,” he says.
Harty notes that many families neglect planning for their retirement because developing a strategy to protect lifelong support for the disabled individual takes precedence over securing their future. This is an understandable mistake that advisors should challenge. Just like on an airplane, where the instruction is to secure the oxygen mask before helping loved ones, it is vital to first ensure that the caregiver's financial planning is on a sound footing.
Fetal alcohol spectrum disorders, a group of conditions that can occur in a person who has been exposed to alcohol before birth, is an area of special needs that is not yet on counselors' minds when they think about disability. Up to 10% of children born in the US and up to 25% of those adopted have been exposed to alcohol before birth.
Kathy Hotelling of Pittsboro, NC, has spent the past three decades organizing benefits and care for her adopted daughter, now 30. While the girl officially lives independently, the reality is that providing and maintaining the countless benefits that the girl demands is a full-time job for Hoteling.
Mixed results
Hotelling reports mixed results in her interactions with financial advisors over the decades. On one occasion, she says, when her daughter was very young, a financial adviser suggested they put some stocks in her daughter's name. “Even then, I knew that putting the assets in my daughter's name would be her undoing in terms of eligibility for public benefits,” Hotelling recalls. She changed advisers.
Today, Hotelling is satisfied with the services she receives from two financial advisors she considers her team working to provide for the girl. Counselors first helped create a tax-advantaged ABLE account, which provides funds to improve the quality of life for beneficiaries without sabotaging government assistance they might otherwise qualify for.
As pleased as Hotelling is with her current counselors, she doesn't rely on them to educate her about the latest services and benefits available to her daughter. The best source of information, she says, is from parent groups who have the most incentive to educate themselves about the possibilities. “Sit down and learn from parents who are already knowledgeable in this area.” Hoteling advises. “Parents who are organized are in a privileged position to do research, network and are often the best resource for what is available.”
Congress created the Achieving a Better Life Experience (ABLE) accounts in 2014. The measure provides that up to $100,000 in an ABLE would be disregarded for purposes of determining a beneficiary's eligibility for Supplemental Security Income. So, for example, instead of Hotelling's daughter paying her rent directly—which would count as income and hurt her SSI eligibility—she makes annual contributions and the rent is paid out of the ABLE account. In 2023, parents or others can contribute, in total, up to $17,000 per beneficiary, an amount that increases as the annual gift exclusion is adjusted for inflation.
What is a United Special Needs Trust?
A Pooled Special Needs Trust, also referred to as a (d)(4)(C) trust, is a variety of SNTs managed by a nonprofit organization where the assets of many people with special needs are pooled together. While each beneficiary's account remains their own, the trust can provide management services and invest in products that may not be available to a single beneficiary. Participation in a pooled SNT may be available to a person over 65, unlike a plain vanilla SNT.
Depending on the pooled trust, a beneficiary may work with a social worker or trust advisor to tailor a fund distribution plan that fits their lifestyle. As with an individual special needs trust, funds in a pooled trust supplement a beneficiary's government benefits. Funds may be used to pay expenses within specific permitted criteria. These expenses often increase or improve the beneficiary's quality of life.
Medicaid and SSI recipients looking to spend down their assets to qualify for or stay on government benefits can transfer funds directly into a pooled trust account, often on their own and without having to rely on a member's help of the family.
Responsibilities of Trustees
Perhaps the primary responsibility of trustees is to ensure that they do not inadvertently jeopardize the beneficiary's eligibility for Medicaid and SSI. Even for high-net-worth families, such flexibility can be critical. Medicaid and SSI are both “means-tested” benefit programs; beneficiaries must not exceed certain limits of income and assets or resources. A pooled trust can help a person stay within these limits and continue to receive benefits.
More than a health care program for low-income people, Medicaid is not only the nation's primary health insurance program for people with disabilities, but also a ticket to many services for disabled individuals and families. Theirs. For example, Medicaid provides funding to keep people with intellectual and developmental disabilities in the community. Medicaid is generally the only source of funding for them to live and work in the community with friends and families and avoid more expensive and segregated nursing homes or facilities.
Most people understand Medicaid as a health care benefit for low-income people. What is less understood is that Medicaid also benefits people with disabilities and is, moreover, the gateway to many services and benefits of tremendous value even for HNW families who have the means to pay for health care privately. So even if the health insurance component of Medicaid isn't important, the other benefits often are.
The rules for Medicaid eligibility are extremely complicated. While Medicaid and SSI are closely related federal programs, Medicaid is administered on a state-by-state level. In New York, for example, Medicaid recipients cannot have more than $28,133 in resources and $1,563 in monthly income. SSI limits vary. To receive SSI benefits in New York, an individual cannot have more than $2,000 in countable resources or gross earned income that exceeds $1,913 per month.
A typical scenario that trustees must guard against is that beneficiaries earn money—proceeds from an accident settlement, perhaps—that pushes them over the limit. Here, a united trust offers a solution.
Two more points. First, Pooled Income Trusts, like Special Needs Trusts, are irrevocable; contributions are non-refundable. Additionally, a rollback provision means that upon the beneficiary's death, any funds left in the trust (up to the total lifetime medical assistance paid on behalf of the beneficiary) must be turned over to the Medicaid state that provided the benefits .
Comprehensive language
How can counselors help families to ensure the highest quality of life for beneficiaries with disabilities? One place for counselors to start is by controlling the language they use. “Let the customer take the lead,” suggests Weisz. Use the first language of the person (a person with a specific disability) versus the first language of the disabled (a person with a disability). So it's better to say, “John uses a wheelchair” instead of “John is confined to a wheelchair.”
Emphasize abilities, not limitations. It is a person who uses a device to speak. Not a dumb person. Keep the value judgment out of it. It is a person with multiple sclerosis, not a person who has multiple sclerosis. Avoid terms like “normal person” or “healthy person”. Finally, avoid portraying people with disabilities as inspirational simply because of their disability.
Counselors do well to ask, in the usual course of data collection, “Are there special needs in the family?” From there, it's logical to turn to problem solving: “Let's grasp the situation and figure it out.”
“It's never too early to start transition planning,” Weisz concludes. “The resources are there. They need coordination. Advisors are uniquely positioned as guardians of a family's financial future—to take the lead with the comprehensive, long-term relationships needed to course-correct as life unfolds unpredictably. “Everyone is in constant survival mode dealing with the here and now,” Weisz continues. “Taking things one day at a time has its limits. There is freedom in having a plan.”