replacing the irreplaceable parent power point 20090724
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Presentation on Special Needs Planning for parents of Children with Special NeedsTRANSCRIPT
Replacing the Irreplaceable ParentThe Special Needs Dilemma
By
Andrew H. Hook, CELA, CFP
Sandra Smith, CELA
(c) Oast & Hook, 2009 2
Most Parents Lack a Plan
The Hartford Financial Group: 62% of Parents with Special Needs (SN) Children do not have a plan and those that do, make costly errors.
Met Life: 73% have not begun setting aside money for their SN children & don’t know where to turn for advice
(c) Oast & Hook, 2009 3
The Solution Comprehensive Special Needs Plan:
It is more than drafting a SNT Developed with Multi-Disciplinary Expertise:
Legal Tax Financial Planning Social Work
(c) Oast & Hook, 2009 4
Components of SN Plan Sources of Income &
Support Special Education Insurance
Life Insurance Health & Medical
Public Benefits Tax Legal
Letter of Intent Surrogate Decision
Making Housing Choice of Care Givers
& Fiduciaries
(c) Oast & Hook, 2009 5
Sources of Income & Support
Distributions from SNT SSDI SSI Military & Civil Service Survivor Benefits Family Support
(c) Oast & Hook, 2009 6
Special Education Individual Education Plan Age of Majority
Guardian Special Ed POA Local Educational Agency appoints
representative Transition Planning
(c) Oast & Hook, 2009 7
Life Insurance
Provides source of funds after parent’s death for care of child with SN
Consider Permanent Life Insurance (LI) Needs Analysis
Develop Budget Retain CFP to calculate unfunded need
(c) Oast & Hook, 2009 8
Health Insurance & Benefits
Parent’s Group Health Insurance COBRA HIPAA
Medicaid Medicare
(c) Oast & Hook, 2009 9
Tax Planning Income Tax Deductions CESA’s 529 Plans Tax Credits
Dependent Care Elderly and Disabled
Distributions from IRA to SNT
(c) Oast & Hook, 2009 10
Legal Special Needs Trusts (SNTs) Alternatives to SNTs
Pooled Disability Trusts Able Accounts?
Modification of EP for Parents & family members
Review DOB’s Review Title of Assets
(c) Oast & Hook, 2009 11
Letter of Intent Personal Information Medical Information Public Benefits Housing/Living
Arrangements Abilities & Disabilities Personal
Characteristics
Activities Personal Care Meals Expectations for the
future Additional Information
& Instructions
(c) Oast & Hook, 2009 12
Surrogate Decision Making Power of Attorney (POA)/Advance Medical
Directive HIPAA Privacy Waivers Special Ed POA Guardianship/Conservatorship Representative Payee
(c) Oast & Hook, 2009 13
Housing/Living Arrangements
Traumatic Events Moving away from home Losing Parents
Avoid a Simultaneous Double Blow Finding or Creating
(c) Oast & Hook, 2009 14
Living Arrangements Family Members
Estimated that 76% of persons with developmental disabilities live with family members
31% of parents expect a sibling to care for a SN child
Supported Living Arrangements
Independent Living Arrangements with some support
Long term care facilities
(c) Oast & Hook, 2009 15
Choice of Fiduciaries Available Choices
Family Professional advisors Corporate Fiduciaries Non Profits
Consider different persons for different roles Oversight Different Skills
Roles Guardian/Conservator Representative Payee Caregiver Trustee Trust Advisory
Committee Trust Protector
(c) Oast & Hook, 2009 16
Family DynamicsThis Family is Different
Guilt, Anger & Grief Excessive Optimism Depression
Marital Relations Siblings Spiritual Issues
(c) Oast & Hook, 2009 17
Special Needs Planning SNP must be more comprehensive than
drafting an SNT SNP is multidisciplinary The Successful SNP firm should develop a
multidisciplinary practice model.
(c) Oast & Hook, 2009 18
The Parents Robert and Sandy. Ages 55 and 49. Smithfield, Virginia. Robert: PI attorney. Sandy: Teacher. Three Children
Bobbie Jackie Theresa
(c) Oast & Hook, 2009 19
Background Robert is a successful attorney. Sandy is a teacher who is helping her parents who
are in early stages of dementia and her special needs daughter, Jackie.
The beach cottage is a family vacation property which is rented when not used by the family.
Robert and Sandy’s investments are scattered among several commissioned accounts.
(c) Oast & Hook, 2009 20
Bobbie and Theresa Bobbie
Age 22. Unmarried. Attends the
“University.” Dates an “older
woman” he met on a road trip to DC.
Has trouble living within his budget.
Theresa Age 27. Divorced. Graduate of the Darden
School & works in Charlotte
Poor taste in “men.”
(c) Oast & Hook, 2009 21
Jackie Age 18. Unmarried. Jackie has special needs and will not be able
to live independently. Special education. Lives with Robert and Sandy
(c) Oast & Hook, 2009 22
AssetsAsset Robert Sandy Joint
Residence $750,000
NC Cottage $500,000
Savings $25,000
Mutual Fds $200,000
Ret. Plan $1.0 M $100,000
LI (DB) $250,000 $50,000
Assets $1.25 M $175,000 $1.45 M
Debt $700,000
Net Assets $1.25 M $175,000 $745,000
(c) Oast & Hook, 2009 23
Objectives Develop a plan to provide Jackie with a home
and a source of support. Provide for the management of their assets if
they become disabled. Reduce personal liability. Plan for their retirement. Avoid multistate probate. Protect Jackie’s SSI and Medicaid.
(c) Oast & Hook, 2009 24
Support and Income for Jackie Apply for SSI
Deeming ends at 18 Perform Needs Analysis for Jackie
Purchase 2nd to Die LI to provide for unfunded needs
After Robert’s retirement or death SSDI
(c) Oast & Hook, 2009 25
Health Benefits for Jackie Robert’s Group Health Insurance
HIPAA COBRA
Medicaid Medicare
(c) Oast & Hook, 2009 26
Cottage Robert forms a single member LLC and
transfers the cottage to the LLC. Robert assigns 50% of the membership
interests to Sandy. Goals obtained
Limitation of liability. Centralization of management of cottage.
(c) Oast & Hook, 2009 27
Jackie’s Home Form LLC with two other couples. Member managed . LLC purchases home with borrowed funds. LLC leases home to children under Section 8
program. Children pay rent using SSI. Supportive services provided by Medicaid
and privately provided services.
(c) Oast & Hook, 2009 28
RLT Fully funded to avoid probate. Consolidated Investments with Fee Based Advice CST (no distributions to Jackie) with special POA. Upon 2nd to die:
Interest in LLC owning Jackie’s home to SNT. DST’s for Bobbie’s and Theresa’s share
Lifetime duration. Corporate trustee with child as co-trustee. Trust advisor.
Jackie’s remaining share funded by 2nd to Die LI.
(c) Oast & Hook, 2009 29
SNT Andy, family atty, initial trustee. Corporate successor trustee. SNT owns 2nd to die LI Irrevocable with Crummey Wd powers
Exclude Jackie Bobbie and Theresa - trust advisory committee. After Robert and Sandy’s death, it will hold interest in
Jackie’s home and Jackie’s share. Trustee has right to amend to protect Jackie’s benefits.
(c) Oast & Hook, 2009 30
Jackie’s Estate Planning Third Party Created
Guardianship/Conservatorship Representative Payee
Self Created Power of Attorney Advance Medical Directive Special Ed POA