Special Needs Primer

Jerry Ricciardo, CFP® | January 08, 2019

Children and adults with disabilities face an array of complex laws and difficult decisions. A significant portion of the population is classified as disabled. The special needs planning snapshot below begins to outline the scope and challenges these families face as well some of the specialized services that the Westfield Financial Planning provides to address the family’s needs.

First the Facts:

• Over 51 million Americans or 18% of the population are classified as disabled.¹
• 20 million families have at least one disabled family member and over 1/3 of American households are impacted by a disability.²
• Almost 3,000 Americans become disabled every hour.¹
• Only 38% of caregivers have a written will.³

Special Needs Categories:

• Developmental disabilities – disabilities that affect daily functioning such as mobility, learning, self-care and communication (e.g. Autism, Down syndrome, etc.).
• Cognitive or neurological disorders – deals mainly with memory, perception and problem solving (e.g. Alzheimer’s, Parkinson’s, Lou Gehrig’s, MS, etc.).
• Physical disabilities – may be either congenital or a result or injury and cause the individual to rely on devices (e.g. Blind, deaf, Spina Bifida, etc.).
• Mental illness – a psychological or behavior disorder such as Bipolar, drug addiction, Posttraumatic Stress Disorder, etc.

Special Needs Planning Considerations:

• Specialized areas of estate and financial planning that are critical for preparing families for the future well-being of their dependents with special needs.
• Special needs trusts – various trust arrangements that can provide lifetime care while preserving government benefit eligibility for Supplemental Security Income (SSI) and Medicaid, both of which are needs based.
• Social Security Disability Income – not needs based but tied to a worker’s wage history and their contributions to Social Security. After two years on disability, recipient is eligible for Medicare health insurance.
• Life Insurance and joint life insurance for parents or caregivers to provide backup financial resources to a special needs dependent. If left to a special needs trust, recipient can still be eligible for needs-based government programs.
• Long-term care insurance – another safety net for caregivers that can protect their assets from eroding from unanticipated long-term care costs. A dependent with special needs is more secure because the caregiver is more secure.
• Guardianship –an individual legally appointed or approved by the court to serve as advocates or legal representative for the best interest of disabled person.

Sources:

1. National Safety Council Injury Facts, 2008.
2. National Disability Institute, REI Tour Annual Report, 2007-2008.
3. MetLife 2011 Torn Security Blanket Study.