Creating a Lifetime of Care for a Child with Special Needs
When Brian and Diane Vollmert learned that their son, Scott, has autism, they gave themselves a night for the news to sink in. Then they did what every loving parent would do: They sprang into action, learning everything they could about which protocols and services could help give Scott the best chance at leading a fulfilling and happy life.
As they built a circle of support for their son, the Vollmerts’ expenses also started piling up.
“Diane and I agreed early on that we weren’t going to let money stand in the way of getting Scott whatever he needs. So we became experts at jockeying around the credit cards,” said Brian. “We had six figures worth of debt. It became very real to us that our situation wasn’t sustainable. Still, getting financial help was the furthest thing from our minds.”
That is, until Brian’s brother kept mentioning Tom Canale, a wealth management advisor with Northwestern Mutual.
“Honestly, we agreed to meet with Tom only to appease Brian’s brother,” said Diane. The Vollmerts were totally focused on Scott’s day-to-day needs. ”We didn't have a lot of time to think about what 20 years in the future might look life.”
An expert in planning for children with special needs, Canale immediately understood how overwhelmed the Vollmerts were feeling. But rather than diving first into specific planning solutions, Canale did something totally unexpected. He began by getting to know the Vollmerts, asking them about their hopes and dreams for Scott, their three other children and themselves. As they talked about their goals and objectives, the Vollmerts began to see how sound financial planning could provide an anchor for Scott’s future and theirs.
Here are three of the crucial steps Tom suggested for the Vollmerts that are important for all families with special needs:
1. Protect your child’s eligibility for government benefits. “The Vollmerts had two crucial goals in mind when we first met,” said Tom. “They wanted to ensure that Scott continues to receive support and services no matter what happens to Diane and Brian in the future. And they wanted to make certain that their daughters won’t have to assume financial responsibility for Scott at any point in time.”
Tom suggested the Vollmerts focus first on qualifying for and protecting Scott’s access to essential government programs such as Social Security and Medicaid. “These vital programs help cover basic living costs, like food, housing and clothing. However, what many parents don’t realize is that these programs limit the amount of assets a child can have in his or her own name to $2,000,” said Tom. “It’s critical to understand that if you or a loved one writes a check directly to a child with special needs or leaves him or her an inheritance directly, the government could freeze that child’s benefits. Restoring access to those programs can require your child to spend down his or her assets and reapply for the program, which will cause a lapse in service and disrupt continuity of care. And in the meantime, your child could lose thousands of dollars in benefits.” For more information about Social Security benefits and Medicaid, see www.ssa.gov and www.medicaid.gov.
2. Set up a special-needs trust. Tom then explained how a special-needs trust could help the Vollmerts provide for Scott’s future needs, thus reducing the chance that their daughters would ever need to share the financial cost of his care. This special legal document enables the Vollmerts to fund Scott’s future needs over and above what Social Security and Medicaid provide without those assets counting against him for the purpose of securing public benefits. “You can fund a special-needs trust with any money you save for your child’s future and/or with gifts others make to the trust on your child’s behalf; a special-needs trust can also be funded with permanent life insurance or the proceeds from an inheritance, litigation or even a personal injury settlement,” said Tom. “Just be sure your loved ones know not to leave any gifts of money or inheritances directly to your child.”
A special-needs trust also provides protection from creditors and claims. “Many parents leave money to their other children with the assumption that they will use that money to care for a sibling with special needs. What they don’t realize is that if any of those children are sued, file for bankruptcy, get divorced or are involved in a legal proceeding, those assets become vulnerable,” said Canale. “A special-needs trust can help keep assets safe so that your child will have the quality of life you want for him or her after you’re gone.”
3. Don’t put planning for your own future on hold. Tom also helped the Vollmerts to think about their future, understanding that they need to plan not just for their retirement, but also Scott’s. “Recognizing the need to plan for two generations of retirement—theirs and Scott’s—was an ‘ah-ha’ moment for the Vollmerts. Ultimately, it prompted them to become more proactive in managing their own finances,” said Tom.
Tom helped Brian and Diane create a budget and a savings plan to address their short- and long-term needs. This provided much-needed structure to the Vollmerts’ financial lives. That, in turn, opened the door to making other important decisions for Scott’s future, including planning for the time when he legally becomes an adult.
“When children turn 18, they automatically become their own guardians and can make their own financial and medical decisions, regardless of their ability to actually do so,” explained Tom. “If your special-needs child will be incapable of managing his or her own health and financial decisions, consider applying for legal guardianship 18 to 24 months before the child turns 18. If you anticipate that your child will be able to live independently, you’ll nonetheless want to have a health care power of attorney in place so that you can make medical decisions if your child is unable to.”
Imagining your child’s life without you involves some of the most important and emotional decisions parents will have to make. “The planning we did with Tom has given us peace of mind,” said Brian. “It has given us hope that if Diane and I aren’t here, Scott will have the resources in place so that when medicine and science finally catch up to autism, he can become a benefactor of whatever progress is made down the road. It makes all the difference in the world knowing that we’ve done the right thing for Scott and for the girls by having the future carved out for them financially.”
Please note that this publication is not intended as legal or tax advice. Financial representatives do not give legal or tax advice. Individuals should seek advice based on their particular circumstances from an independent legal or tax advisor.