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PLANNING FOR SPECIAL-NEEDS BENEFICIARIES

Do you have a physically, emotionally or developmentally disabled child or relative?  A survey of parents and caregivers of persons with special needs reported by MetLife in The Torn Security Blanket: Children with Special Needs and the Planning Gap released in 2005 and updated in October 2011 showed that, while some special-needs children are able to grow into adults who can care for themselves, most of the parents surveyed don't expect their special-needs children to ever be able to independently manage their own needs for food, shelter, clothing, and medical care.  Yet, despite this expectation, 62% of those same parents have no estate plan whatsoever and only 21% have established some sort of Special Needs Trust to provide for their special child's financial future.  Don't be that sort of parent to your special child!

It's not that the parents of special-needs children don't realize that they need information and help.  They all know that they do!  The problem is not a lack of desire to do what is right for their children – instead, it’s attributed to a special-needs information shortfall.  Two-thirds of the parents surveyed reported that there is little financial planning information available that focuses on such children and 57 percent said that what exists is difficult to access.  Overwhelmed by the day-to-day pressures of raising a special-needs child, 85% of them had turned to their doctor for financial advice!

The need to address the long-term care of our special-needs citizens is pressing.  The U.S. Census Bureau estimates that more than 10% of Americans between the ages of 16 and 64 suffer from some form of physical, mental, or emotional impairment.  Special needs can range from disabilities that are obvious, such as those resulting from cerebral palsy, Down syndrome, or paralysis, to those that are less evident, including psychological conditions and developmental delays.  Since most parents do not expect to outlive their special-needs children, some provision for their future needs to be made.

Failure to make appropriate plans for when the parents are gone often results in at least temporary loss of eligibility for government benefits and leaves nothing set aside to meet the child’s needs that are not met by government benefits programs.  Indeed, an uncontrolled inheritance can result in the disaster of loss of subsidized housing and having to get back on a long waiting list after the inheritance is spent! 

If you have a special-needs person in your life, your planning needs to make sure that it does not cause your beneficiary’s assets to exceed the federal aid eligibility limit, which would make him or her ineligible for those benefits.  Your family needs to establish a Special Needs Trust to provide for your special-needs beneficiary and preserve the trust assets for his or her benefit without running afoul of federal or state eligibility rules.

Because of the unusual needs of the special-needs beneficiary, a good target today for the trust assets when both parents are gone is at least $2,000,000.  Often, because of the financial burdens of caring for a special-needs child, this can only be funded through life insurance. 

We can help you to make appropriate plans for the special-needs person in your life.  It would be our honor to do so.  CLICK HERE to contact us and explore this with us.

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