Even the Smallest Estate Requires Planning

January is Financial Wellness Month at DSI

 

Please welcome an article by Gordon Homes as he shares with us some helpful tips on estate planning for families that have a child with special needs...

 

Even the Smallest Estate Requires Smart Planning

 

Prepared by MetLife
 

Provided by Gordon Homes, CFP^®

Senior Financial Services Representative, Special Needs Financial Planner

Many people think estate planning is necessary only for those with significant assets; however, even the smallest estates require smart planning to protect family members with special needs.

In its simplest form, an estate plan helps ensure your wishes are carried out, should you be unable to do so. This protects your family from making tough decisions as well as ensuring that assets are divided in the way you would have wanted.

Below are 10 steps to help caregivers get started in preparing for the financial future of their dependent with special needs. Each circumstance is unique, so caregivers should consider their own situation carefully.

Plan for future medical, educational and housing needs for your dependent. Start by thinking about what your dependent’s needs will be in the future – and develop your financial strategy based on these projections. What medical needs will they have.  Will they need funds for job or technical training? Will they need supported living or functioning independently?

 

Review beneficiary designations. To maintain eligibility for government benefits such as Medicaid, a dependent’s assets must not exceed $2,000. Check with close friends and family to see if they have designated your dependent to receive any inheritance or insurance benefits from their estate– if they have, it’s important that they leave this to a special needs trust (see number eight on this list for information on trusts). Don’t let well‐intentioned friends and family unknowingly cause your dependent to lose access to valuable resources.

 

Have a family meeting to discuss your dependent's future needs. Just as caring for a dependent with special needs is a family affair, so is the related planning. With the thoughts that you have facilitated your dependent’s special needs throughout their life, meet with your family members to discuss their concerns and options for future care. This is also a good time to broach the beneficiary designation or inheritance issue discussed above.

 

Speak with a special needs financial professional and create a team of professionals to assist you in planning. Once you have determined the current and future financial needs of your dependent with special needs, it’s important to pull together a support team that can help guide you through the variety of options available to you and your family. The composition of the team may vary depending on your unique situation, but it should include a special needs financial planner, attorney, and perhaps a health professional and school guidance counselor.

 

Contact local nonprofit organizations for additional resource support. Your local nonprofit may be able to provide resources that can help with planning or that supplement the standard services provided by government agencies. A good starting place is to first contact a nonprofit dedicated to your dependent’s special needs.

 

Apply for government benefits. Government benefits – such as Medicaid and Social Security may help provide for your dependent’s needs in the form of medical treatments, supplies, equipment, respite, financial assistance and more. Reach out to the Bureau of Developmental Disabilities (BDDS) and/or Area Agency on Aging.  Contact Social Security to find out what benefits your dependent may qualify for, or visit their website (www.ssa.gov).

Prepare your Last Will and Testament (review and update periodically). A Will declares how you want your estate to be distributed and allows you to select a guardian for your dependents when you die.  It may be especially important to prevent automatic asset distributions directly to a person with special needs, and to be cognizant not to leave your dependent with special needs any assets in excess of $1,500 (as discussed in number two above.).  Referral to special needs attorneys is available upon request. 

 

Consider setting up a special needs trust. This allows caregivers a way to provide for their dependent’s care and quality of life, without disqualifying them for government benefits.  Trusts can be set up either funded or unfunded, and must be overseen by a trustee – often a family member, caregiver, pooled trust or bank trust officer. Funds can be contributed gradually over the years, or the trust can be designated as a beneficiary of an inheritance or life insurance. The money in the trust must be used to enhance the dependent with special needs quality of life, and can help to supplement standard services and benefits provided by government agencies. Speak to an attorney experienced in special needs planning for more information.

 

Apply for guardianship and conservatorship, if applicable. Caregivers must apply for a guardianship or conservatorship to maintain legal control over financial and healthcare decisions once a dependent reaches the age of 18. This can take several months, so it’s best to start this process early. There are different levels of guardianship and conservatorship available, depending on the dependent’s capabilities and needs. For example, a limited guardianship could be solely for financial or healthcare‐related decisions.

 

Prepare a Letter of Intent. Although not legally binding, this document is important for providing direction for the person or persons who will care for your dependent with special needs and should be stored with other vital documents, such as your Will. Think of it as a “letter to the caregiver” – it can cover day‐to‐day care routines such as what medical assistance is needed, as well as quality of life guidance such as what entertainment and activities should be provided.

 

Having an estate plan can help you achieve peace of mind and protect your family in the event that you are unable to make decisions. It can take the burden off of your family and help ensure that your wishes are carried out.

Gordon Homes is a Special Needs Financial Planner with the MetLife Center for Special Needs Planning, bringing a unique perspective as a Parent.  He assists families with estate and financial planning, legal and government benefit issues involved in having a dependent with special needs.  Gordon is nationally recognized, contributing to articles in the Washington Post, New York Times and Kiplinger’s Personal Finance.  Gordon is also a Down Syndrome Indiana Sponsor. He is available to speak at parent support group meetings throughout Indiana and Kentucky on topics ranging from the recent Medicaid Waiver changes, Special Needs Trusts, Guardianship and Social Security.  Gordon has offices in Indianapolis and Louisville.  He can be reached at (800) 903-6380 ext. 5042, (317) 567-2005 or ghomes@metlife.com.

IRS Circular 230 Notice: The information contained in this workshop is not intended to (and cannot) be used by anyone to avoid IRS penalties. This brochure may support the promotion and marketing of insurance products. Your clients should seek tax advice based on their particular circumstances from their independent tax advisors.  Metropolitan Life Insurance Company, 200 Park Avenue, New York, NY 10166.

Metropolitan Life Insurance Company(MLIC), New York, NY 10166.  Securities and investment advisory services offered through MetLife Securities, Inc.(MSI)(member FINRA/SIPC), a registered investment advisor.  635 Maryville Center Dr., Suite 200, St. Louis, MO 63141.  MLIC & MSI are MetLife companies. L1112289864[exp1013][IN]