“The financial planning challenges for parents of special needs children are myriad and complex—and retirement planning presents one of the toughest challenges.”
The big challenge for many Special Needs Families is balancing the financial needs of retirement with the long-term needs of a child with a disability. Those latter needs typically will outlive the parents.
Morningstar’s recent article, “Retirement Planning for Special-Needs Families,” explains that the need is growing. One in every five Americans has a disability, and 20 million families have at least one family member who has a disability, says the National Disability Institute. The costs can be extremely high, with the lifetime cost of caring for a person with autism ranging from $1.4 million to $2.4 million, according to an advocacy and research group. Lifetime costs are similar for people affected by other severe impairments.
While government benefit programs provide some assistance, the eligibility rules vary depending on when a disability is incurred. There’s a set of rules for people disabled as children (prior to age 22) and another for those disabled at older ages. Here some key topics for consideration and action:
- The care plan should include the safety of the child, along with aspects of life fulfillment, including work, learning and play.
- Projected cash flow needs will depend on the type of disability, the capability of the individual needing care and the level of care needed.
- Investment allocations. Families who have a child with special-needs should be more conservative in how they allocate their retirement portfolios, and maintain a higher level of cash.
- Government benefits include Social Security, Medicare and Medicaid.
- Families need to understand all of the government rules on asset and income limits for a person with disabilities.
- A Special Needs Trust is a critical part of a family retirement plan.
- Beneficiary designations must be structured properly, because inheritances can jeopardize government benefits eligibility.
Quality planning is complicated. Families who have children with special-needs should consult with an experienced special needs trust attorney.
Reference: Morningstar (January 17, 2017) “Retirement Planning for Special-Needs Families”
Suggested Key Terms: Asset Protection, Probate Court, Inheritance, Estate Planning Lawyer, Elder Law Attorney, Special Needs Trust, Disability, Medicaid, Social Security, Medicare, Beneficiary Designations
If it is So Important, Why Doesn't Everyone Make a Will?
“Understanding what happens to you when you die may help you understand the intricacies of your estate and make planning both simpler and more effective.”
No one likes to plan for his or her death, but it’ll happen to all of us, says The Reading Eagle Business Weekly in the article “Make a will, plan for distribution of assets.”
You can pass your wealth to anyone you want, but state and/or federal taxes may be due on these transfers. The rules are also complex, and if you die without a will, the state laws of intestacy may say who gets your wealth.
Most folks make the mistake of signing their wills and life insurance policies, then putting them in files and forgetting about them. These documents and your intentions will become out-of-date. It’s not uncommon for a decedent to have been divorced for five years when they die, but the ex-spouse still inherits all of his or her assets. Why? Because the ex’s name is still in the will or is listed as the beneficiary of the life insurance policy. This happens more frequently than you might think.
Probate?
Probate versus non-probate assets is one of the most misunderstood concepts in estate planning. Probate is the process that deals with proving a will's validity by filing it in court. The will names an executor who is responsible for fulfilling its terms. The estate assets are identified and valued, then given to the individuals named in the will.
There are also non-probate assets that are transferred by operation of law. They specifically include accounts with beneficiary designations like IRAs, 401(k)s, pensions, retirement accounts, life insurance, annuities and transfer-on-death accounts. These non-probate assets supersede what’s written in the will. The beneficiary designations control them.
Do you have a will? When was the last time you reviewed it?
You should hire an experienced estate planning attorney to help structure an estate plan for both your will and beneficiary designations to allow for the efficient transfer of your assets.
For more information on estate planning, please visit our website here
Reference: Reading (PA) Eagle Business Weekly (January 17, 2017) “Make a will, plan for distribution of assets.”
Comments