Planning for the Disability Community
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According to the CDC, developmental disabilities affect approximately 17 percent of children aged 3-17 in the United States. As medical advances have continued, it’s become more likely that children with special needs may outlive their parents. According to the National Down Syndrome Society, the average life expectancy of a person with Down syndrome is 60 today. In 1983, it was only 25.
JAMA Pediatrics suggests the lifetime costs for caring for a person with autism to be $2.4 million.
As parents and caregivers to children with special needs, we’re faced with challenges most can’t imagine. The University of Wisconsin did a study that demonstrated mothers of a child with autism had stress hormone levels similar to soldiers in combat.
For families caring for loved ones with special needs, the shock of a diagnosis or fear of the results of an accident lead to angst and distress. Each of these are often followed by grief. It may sound strange to some reading this – after all, what is there to grieve? This person hasn’t died.
Grief is associated with the loss of normalcy for families and may dissipate. However, it can also linger, especially as their children move through childhood, adolescence and into adulthood. Families in the disability community face ableism1 and the ongoing dilemma of being viewed as “different,” or even as a burden. They confront much more than a neurotypical family.
I provide you with this basic context because planning for members of the disability community and their family is complex. Planning here is so much more than a retirement cash flow projection, more than a tax or estate plan and special needs trust, far more than an investment portfolio or life insurance policy. It is all of that and so much more.
Mishandling any of these areas can jeopardize a person’s eligibility for public benefit resources. As an advisor, your role is to identify and set up ways to enhance the quality of life for someone who couldn’t do it on their own. It’s a massive responsibility that not every advisor is equipped to handle.
Advisors for the disability community must have the awareness to meet each family or person where they are in life and in the grieving process or acceptance of their reality. Each of these families needs an advisory team to meet them in a compassionate, patient, and competent manner.
In this article, I provide a basic framework for understanding and developing a lifelong plan for a person with disabilities. I’ll introduce matters as they relate to establishing a well thought out and comprehensive plan that ties together life, public benefit, and resource planning as well as financial and legal planning. However, in real life, each element of a plan will include significant and unique details that are beyond the scope of this review.
Life planning
Life planning is all encompassing. What is important to the family and person with a disability? What makes the person happiest and what supports are needed for that person to thrive in their individual life?
The plan should address appropriate education, social life, possible employment and support needed as well as living arrangements and specific care or needs related to the disability. The level of support needed could relate to whether the person will be able to live fully independent or need continuous help. Your job as the advisor is to help set realistic objectives and help the family identify resources to realize these intentions.
A letter of care should be developed by parents or caretakers and updated regularly. This is an opportunity to put in writing everything important about and to the disabled person who is the focus of the plan, their life planning desires and everything that makes them happy or is needed to carry on their most satisfying life. This document is also helpful when a parent or caretaker is no longer able to care for the person. It helps develop continuous care when something does happen to a caretaker. As parents of children with disabilities, this is our ongoing voice to caretakers who succeed us.
Public benefit and resource planning
Current resources will address how to make life planning needs and wishes possible. Resources include private family wealth or government related programs. Government benefits are massively complex. You should get help from a public benefits “expert” to help sort through the ins and outs of what’s available, how to qualify and how to apply.
There are need-based benefits and entitlement benefits. Need-based benefits include Supplemental Security Income (SSI) and Medicaid. The asset and income thresholds to qualify and remain eligible for SSI and Medicaid are very strict (and low). Entitlement benefits include social security retirement, SSDI and childhood disability benefits.
Other benefits include possible state-specific services. For example, in California regional centers, overseen by the Department of Developmental Services, offer case management and help in determining eligibility for services. Section 8 housing is another important benefit. Check with your state for specific available programs including Medicaid waivers and other programs.
Financial planning
Financial planning will help establish the estimated amount of lifetime support the person with a disability will need to thrive. This estimate ties together the life- and resource-planning efforts and the tax, legal and financial planning needed for the person and overall family.
Forecasting anticipated cash flow needs is easy! Just plug it into financial planning software and all set, right? Sure, as long as you and the family know exactly what the future holds, where the person may want or be able to live, what ongoing health- or therapy-related services may be needed and how to account for those rising costs, any special dietary needs, transportation needs, public benefit availability, etc. It’s anything but straightforward.
Start by identifying the needs and goals of the overall family. Then identify funding options and strategies, including timing and eligibility of social security, childhood disability benefits, overall available wealth and a strategy to maximize each dollar. It takes time and effort to pencil out the anticipated costs, and it is strongly advisable to consult with advisors, caretakers, and others in the field who have the skill set to plan for these costs.
Smart wealth accumulation and income tax minimization across generations must be done with the understanding that resources may need to last for 20, 30, 40 or more years. With mom, dad and child, you’re effectively planning for three retirements. So, there’s no room for error and there’s no simple solution. It will likely require a combination of resources, including some insurance to fill in gaps.
Establishing an ABLE account may provide an additional tax-advantaged savings vehicle as a complement to funding a special needs trust. ABLE accounts also provide great flexibility and independence for a person who otherwise has limited access to their funds. If you’d like further discussion on ABLE accounts, here is a podcast I did with VettaFi.
Legal planning
Legal planning, combined with thoughtful financial planning, is all about leaving a legacy. The wealth transfer planning should integrate the needs of each generation, keeping close tabs on proper titling of assets and income tax treatment and considering which generation will be able to use various assets with the least income tax consequence.
Legal planning should also address what protections should be in place for each family member. Are there reasons to consider limited conservatorship or supported decision making? Wills, medical directives and powers of attorney are of course must haves. Which type of trusts are needed to execute the wealth transfer plan and funding of lifetime support? Who will oversee and succeed parents in their role as trustee?
A successor trustee with experience with first-party and third-party special needs trust administration should be identified well in advance – and it likely should not be a family member! A trust protector is often named to help oversee the trustee’s actions. A trust microboard or trust advisory committee may also be appropriate. Many attorneys will suggest a special needs trust formed with testamentary powers (i.e. not active until passing of grantors).
In my non-legal opinion, this can be a mistake. Families can benefit from “test-driving” the trust and all that goes into managing it. The grantors can see how things would work and adjust while they still can. The Special Needs Alliance provides ten reasons to consider a stand-alone special needs trust.
Your involvement as an informed advisor can start as early on as the child’s birth. Families can seek early intervention services for their child after an early age diagnosis. When the child enters the school system (around the age of three), special education may be offered. This begins a parent’s ongoing management of IEPs and seeking their child’s most appropriate education. Transition years, from 15-21, move through high school and the beginning of eligibility for government benefits. After the child turns 22, they finish with the school system and perhaps seek ongoing education or employment and may move out of the parents’ home. Each stage is new territory for families and an opportunity for advisors to offer substantial support, advocacy, and partnership to help your clients plan for and navigate these life transitions.
1 https://www.bu.edu/antiracism-center/files/2022/06/Ableism.pdf
Jeff Vistica is the managing principal of Vistica Wealth Advisors based in Carlsbad, CA. He is a CERTIFIED FINANCIAL PLANNER™, a Chartered Special Needs Consultant® a Chartered Financial Consultant® and an Accredited Investment Fiduciary®. He’s currently pursuing a masters degree in taxation, and he earned an Executive Financial Planner Advanced Certificate from San Diego State University and his bachelor’s degree from Loyola Marymount University. Vistica Wealth Advisors is an SEC registered investment advisory firm. Information was compiled from third-party sources believed to be reliable, however Vistica Wealth Advisors cannot guarantee the accuracy of that information. Hyperlinks to this third-party informational content and websites are provided solely for reader convenience. Information provided is for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Prior to implementing any strategy, everyone is advised to consult with the appropriately licensed professionals to assess your individual situations and needs.
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