In the Blink of an Eye: Special Needs Planning

October 2006
Journal of Financial Planning;Oct2006, Vol. 19 Issue 10, p64
Academic Journal
Statistical studies indicate that a significant portion of the adult population provides care for chronically ill, disabled, or aged family members. Special needs may arise in the future for any client, so financial planners need to exercise regular and careful scrutiny of disability and estate plans, and remain aware of their clients' multi-generational family issues. Obtaining and maintaining eligibility for appropriate government benefits through programs such as Supplemental Security Income and Medicaid are crucial to the financial and medical stability for disabled people of any age. Congress intended the Deficit Reduction Act of 2005 to limit the government's financial burden for future Medicare and Medicaid spending. It effectively makes benefit eligibility more difficult, record-keeping more important, and long-term care insurance attractive to a wider band of clients. Medicaid annuities may be appropriate for some clients, but are fraught with potential hazards. Special needs trusts remain critical to the planning for many disabled individuals. Review older trust documents to be sure they don't hamper program eligibility in light of new regulations. Choose the trustee and successors with great care, and communicate the trust's existence to family and friends to avoid disqualifying gifts. Due to the increasing complexities of federal and state laws, planners and their clients should seek assistance from elder-law attorneys who specialize in drafting special needs trusts. Consult these attorneys in advance of implementing other planning strategies to ensure that the strategies do not unwittingly establish potential barriers to government benefits or estate planning objectives. 529 college plans can serve as excellent investment vehicles for special needs children.


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