Experts agree: Parents with special-needs children need to take care when planning for their child?s financial future.
“Financial planners need to get families in touch with trust and estate attorneys or an attorney who specifically deals with special-needs children,” said certified financial planner Thomas Campi, a principal with Bay Wealth Retirement and Family Advisory in Easton. “It really involves coordination between financial advisers and planners, a very specialized attorney and the family to understand what resources are available.”
Bryan Kelly, a certified financial planner with the Bel Air-based Kelly Financial Group LLC, said a legal specialist is vitally important to ensure families don?t miss out on government-sponsored benefits available to children with special needs.
“This area [of financial planning] requires the family to work with their planner and bring in a specialist in the legal field whoworks with Medicaid and [Supplemental Security Income] to maintain eligibility for those benefits,” Kelly said.
Like Campi, Kelly said parents must write a will before any other type of plan to aid their children.
“It?s not just for the wealthy. It?s for middle America,” he said. “The value of a home, potential life insurance and savings can add up to several hundred thousand dollars that can be available to a child.”
But instead of simply leaving the assets to the child, a special trust fund probably is needed, Kelly said.
“You don?t want to leave money outright to the child because it will hurt their Medicaid and SSI eligibility,” he said.
While planning is important, most parents of special-needs children don?t take the basic steps needed for protection, according to a 2005 survey of parents with special-needs children conducted by Metropolitan Life Insurance Co.
The survey found that two-thirds of participants had not written a will, and nearly a third had done nothing to plan for their children?s financial security.
The MetLife study also found that 82 percent of parents surveyed hadn?t set up a trust, and 84 percent hadn?t written a letter of intent outlining an agreement for the future care of their child. Seventy-two percent hadn?t named a trustee to handle their child?s finances, and 52 percent hadn?t named a guardian for their child.
Additionally, Kelly and Campi said, parents also need to stay abreast of changes in the law that could impact trusts or change eligibility.
“It?s an evolving area of the marketplace,” Kelly said. “As Medicaid continues to be strained financially, benefits continue to evolve.”
