Financial Planning: For Those Who Are at the Starting Line

Financial Planning

I have always been a big thinker and quite an emotion-filled person. Even as a young person, I was the one to feel the worst when summer ended, the one to be the saddest when we finished a vacation, as well as the first to be excited over anything.

I am not afraid of emotions or talking about feelings, so it was this in mind that a certain post on Facebook really elicited some big emotions, followed by some serious conversations, and then this article.

The post said that every parent plans to raise their child for 18 years, then, let them go and hope they come back to help the parent when they are older. BUT, a special needs parent raises a child for 65 years and while doing this prepares for the years after they themselves are gone.

When I sat and thought about it, I realized that this is so very true. I had a friend, who has a special needs child, and they received a very serious medical diagnosis that brought home to me just how serious the topic of preparing/planning for the future for our special needs child is.

The overriding question that I felt after reading the post and talking things through with my husband and friends is: What should we do to help prepare for when we are not here? In other words, how can we be sure our special needs child is taken care of in the manner we want them to be taken care of?

I took this question (along with my emotions) to Joe Mersol. He is a financial planner with 25 years of experience in financial planning, as well as estate planning, but more importantly, special needs planning. According to Joe, “It is very important to work with those who specialize in the area of special needs…who know their stuff.” I soon learned why that is the case.

Joe was kind enough to sit down with me and answer some big questions. He also provided information that he wanted everyone to download or print out to use as you begin or continue your journey to helping secure your special needs child’s future.

I began by asking the biggest question I had: If we haven’t done anything yet, should we panic? Joe, very kindly, reassured me that there was no need to panic but to use this moment to understand that there are things all of us should be doing, and now is the time to begin to do them.

This led to my next question: So for those who are at the starting line, what would be your first recommendation to do? Joe told me about the 3 things that are the most important to do: Guardianship, Special Needs Trust and Letter of Intent.

Guardianship:

“Guardianship,” Joe said, “is the best way to make sure that the person you desire to take care of your child will actually be the one to do so. It is a security especially with a special needs child.” He said that guardianship is a big issue for those with young adults near to, or over, the age of 18. “Since no one has a lease on life, there is no way to plan to always be there for your child, but who would be that person if you were no longer here?” and “that without guardianship, your child could become a ward of the state.”

If you fail to select a guardian for your child with special needs, the court will appoint one. The court’s selection may not be the same that yours would have been. Joe recommends seeking out legal assistance from an estate planning attorney who specializes in special needs planning to assist with guardianship for many reasons. He said that the only downside to guardianship is that it does come with responsibility and does require a certain level of commitment from the person selected. So he recommends talking through guardianship well with the person you are selecting.

Special Needs Trust:

Joe began explaining the trust by first talking about the ways our special children can receive help from government sources. He explained the three potential sources of government benefits: Social Security Disability Insurance -SSDI, Supplemental Security Income- SSI and Medicaid are three sources of government benefits available to disabled individuals.

SSI and Medicaid are both “need and income based” An important thing to note is that one of the benefits of SSI is that it makes the person automatically eligible and, in most states, qualified for Medicaid. Otherwise, Medicaid eligibility is determined by state law. Also, those with SSI may also entitle the individual to other benefits like food stamps. BUT, as Joe continues, the programs offer this support as long as the individual has assets under a certain amount. IF the assets exceed that amount the government can reduce or actually eliminate support.

Joe said “All the good things that are lined up for your child can be eliminated if someone gives them a monetary gift or if someone leaves them money in their will.” So this means that that well-meaning gift can place the individuals assets over the required limits and thus jeopardizing their government benefits.

Scary right?

This is where the special need trust comes into play. It is an estate planning tool that can help maintain government benefits and provide care and assets to the ones with special needs. It can help meet the ongoing needs of the person with special needs or to provide a substantial gift without jeopardizing eligibility for government benefits. This trust, actually the most common one of three types available is called:

A Third Party Trust

Joe explained that the purpose of this special needs trust is to make sure that the person with special needs will have the resources necessary to live fulfilling lives.

The caregiver is the grantor of the trust and a separate person is the trustee. The individual (dependent) with special needs is the beneficiary (and can be one of several beneficiaries).

The trustee, the person who oversees the use of the money in the trust, would use the money to pay for things not covered by federal or state programs such as SSI or Medicaid and has specific provisions which allow the trustee to use the assets for the dependent’s benefit. The trustee is someone YOU get to pick.

There are ways in which you can fund a trust, so that you know for certain that your child will have financial resources for their lives. These include investments and/or other financial resources as well as permanent life insurance. These are things to bring up to the financial planner or attorney when you talk to one.

I know for many the area of financial planning and trusts is completely new to them and the words and terms can be ones that you have never heard, let alone used in relation to your child. This is why Joe mentioned the need for your financial planner and attorney to be specialized in the area of special needs.

The key, I think, is to try not to become overwhelmed but to begin the process to gain security for your special needs child.

Letter of Intent

This letter of intent is a letter of love to your child with special needs and to those who will be entrusted with their care after you are unable to do so. “It is the chance,” said Joe “to tell the person you know will be taking care of your child everything about them… Do they like ketchup? How about trips for ice cream? What shows do they watch and when?”

The letter of intent allows you to put all these thoughts in ONE form…ONE place.

Joe said that sometimes the letter of intent includes videos and pictures to make it even more special.

While being the letter of love to your child, the letter of intent also communicates information like the names and contact information of your child’s physician, dentist, and therapists as well as the contact names and numbers of family members.

Joe and Lee Ann Mersol smiling in front of a Christmas tree.

Joseph M. Mersol Special Needs Financial Planner (Photo of Joe and his wife Lee Ann)

Like an IEP (Individualized Education Plan), the letter of intent is something that needs to be reviewed annually and updated, when necessary. This way your child’s information is always up to date.

The letter of intent really is a document to memorialize your knowledge of your child’s needs and to help future caregivers understand the hopes and dreams you have for your child.

It is also a document that will take time to complete so it is best to start it and work through it at your own pace.

Our hope is that this article will help those who have a special needs child in their life to begin the process, if not already started, to make sure their child’s future is secure and that the wishes of you, the parent/caregiver, will be followed when you are no longer with them.

It really is peace of mind that is the true hope.

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This post originally appeared on our January/February 2020 Magazine