More than 12 percent of Americans live with some form of disability,1 and their families often struggle with the concept of maintaining a quality of life for their loved ones after the family support is no longer available. Families desperately need concrete plans for the lifetime care of a family member with special needs. Yet, often distracted by day-to-day demands, they may put off these critical decisions far longer than they should.
Helping families plan for the financial security of a dependent with special needs can be one of the most rewarding jobs you undertake, but I can’t emphasize enough the importance of taking the time to understand the emotion and complexities involved in these situations.
Financial professionals who are successful in reaching this market know that it takes specialized knowledge and extraordinary empathy for the family. Building relationships and educating families about their options is the first priority. Providing solutions to the special needs community requires a long-lasting commitment, with discussions that can go far beyond a family’s financial protection needs.
In order to protect the individual’s eligibility for government benefits, one of the first steps is establishing a special needs trust. It is important that the family works with an attorney who specializes in this field and is familiar with the various types of benefits that are available. State bar associations, local nonprofit groups that serve the special needs community, and groups such as the Academy of Special Needs Planners and the Special Needs Alliance are excellent sources for listings. We suggest that families interview two or three attorneys to make sure they find one who can best address their particular situation.
Government benefits such as Supplemental Security Income and Medicaid cover the basic necessities of life—food, clothing and shelter. Protecting these benefits is absolutely critical.
When structured correctly, a special needs trust preserves the dependent’s eligibility and provides the means to supplement government benefits. Mistakes in planning can be costly. Generally, if someone with a disability has more than $2,000 in assets in his name, he will be ineligible for the government benefits. Even a well-intentioned relative could accidentally disrupt the individual’s eligibility through a small gift or bequest.
The advantage of establishing a Special Needs Trust sooner rather than later is that it can receive contributions from many sources—such as grandparents, aunts, uncles and godparents—immediately upon its creation.
One of the most effective ways to fund a special needs trust is through life insurance, with payment of the death benefit directly into the trust upon the death of the insured. However, understanding the issues specific to special needs care allows you to design an insurance plan that is appropriate based on each individual’s circumstances. Second-to-die coverage may present a real opportunity, as premiums are generally less expensive than a policy insuring a single life. The death benefit will help fund the special needs trust when it is needed most: when both family members are no longer alive to help support their loved one with special needs.
Producers need to be prepared for the wide-ranging, emotional discussions they’ll need to guide families through. For example, you’ll want to be familiar with the letter of intent, which, while not a legal document or financial planning tool, is extremely valuable. The letter describes the likes and dislikes of the family member with special needs—everything from their personal preferences and habits to health issues, educational goals and preferred housing. It also outlines the parents’ hopes and dreams for their child. It’s a very detailed road map for future caregivers that can be emotionally draining to complete. In fact, it’s not uncommon for families to take three to six months to finish a draft, and it’s a document that should be updated frequently as circumstances change.
When engaging in these discussions, it’s a good idea to take clients out of their homes and away from stressful care settings and distractions so they can think clearly. But even before you schedule one-on-one sessions with families, you’ll want to establish relationships with nonprofit associations and participate in educational workshops to begin building a level of trust within the special needs community.
For these workshops, we suggest leaving your business cards at home. The message you’ll want to convey is: “Let me provide some basic education about what products and services I may offer as you plan for the financial future of your loved one with special needs, keeping in mind the need to preserve government benefits.” A PowerPoint presentation won’t work in this setting; in fact, you may find yourself sitting in a circle on the floor, leading a discussion and answering questions informally.
Learn the language of the special needs community and understand the dos and don’ts. For example, speak “person first”; don’t say “a special needs child” but rather “a child with special needs.” You’ll also want to know what acronyms represent (e.g., IEP—individualized education program). Just as importantly, you’ll want to stay current on relevant, new legislation and stay abreast of other new developments in the field. Be a part of the community.
Serving the special needs community really does get to the heart of what we do for a living—providing peace of mind and protecting future hopes and dreams.
1. Erickson, W., Lee, C., and von Schrader, S. (2010). 2008 Disability Status Report: the United States. Ithica, NY: Cornell University Rehabilitation Research and Training Center on Disability Demographics and Statistics.
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