Planning for a Child With Special Needs
John Kirkland Jr., 26, has a full, rich life. He works at Park Sterling Bank in Charlotte, NC, exercises regularly, and has a close relationship with his parents. Like many 20-somethings, he lives with his parents. But in his case, that’s because John has Down syndrome and needs his family’s support.
His parents, Chris and John Kirkland, have made sure they have the necessary documents and assets in place to provide for their son’s financial, medical, and social well-being when they’re no longer able to do so. Their thoughtful preparations have helped ensure that their son will be well cared for throughout his life.
Families with children who have special needs face unique challenges. Planning may start with visiting a financial advisor. “I talk with families about their goals.” says Land Hite, a senior vice president and financial advisor at CAPTRUST. “My job is to make them think, help them plan, and put them in touch with people to help.” When a family has a child with special needs, they’re concerned about making plans for how the child will be cared for once the parents can’t.
Chris says she and her husband created a special needs trust to make resources available to John Jr. after they’re gone while leaving him eligible for Social Security and Medicaid. “It’s not a lot, but it allows him to work and remain eligible.” She adds, “We also wanted his siblings to have resources for helping him.”
A special needs trust enables a child to maintain eligibility for Supplemental Security Income (SSI) and, more importantly, Medicaid, says Larry Rocamora of the law firm of McPherson, Rocamora, Nicholson & Nordgren in Durham, NC. That means the child will have access to free health care, although the implementation of the Affordable Care Act has opened up other insurance options for those who can afford to pay for it. To qualify for public benefits like SSI or Medicaid, the child must be unable to engage in substantial gainful activity, defined as earning more than $1,090 per month, due to a medically determinable physical or mental impairment that is expected to last for a continuous period of at least 12 months or that would result in death, says Rocamora.
Another reason Medicaid eligibility is important: Some group homes only accept individuals on Medicaid, says Rocamora. This may be true even if there is $10 million in trust for the individual, says Rocamora.
Having a trust means that you need a trustee—either a corporate trustee or an individual—to release funds. The advantage of corporate trustees, often banks, is that they’ll be around for a long time, they know the relevant laws, and they have other expertise, such as investment expertise, says Rocamora. “They won’t take the money and run.” But they may be impersonal, unlike a family member who acts as trustee. Sometimes Rocamora’s firm sets up a corporate trustee and a family member as co-trustees. This way, the trust gets the benefits of both approaches.
Naming a guardian who will be in charge after parents can no longer fill this function is another legal decision. “A guardian takes care of the person on a day-to-day basis,” says Hite. He or she helps with issues such as medical decisions. The guardian “may not have enough finacial resources” on his or her own, “so this is where the trust comes on,” he says.
Rocamora says that, in many states, naming a guardian requires that the adult child be declared incompetent. “Incompetent” is a harsh word. When practical, especially when the child is high functioning, Rocamora suggests establishing power of attorney and healthcare power of attorney instead. These documents let the agent act on behalf of the child. In John’s case, his parents hold these two powers, which will pass to his siblings as successors.
What if there’s no family member willing to act as a guardian? “You can have a public guardian appointed, but that’s not someone who knows the child,” says Rocamora. There are institutions, such as the Corporation of Guardianship in NC, to take on the role.
In addition to a trust and a guardianship, Rocamora suggests that parents write a letter of instruction, also known as a letter of intent. It explains the parents’ hopes for their child. When children are unable to communicate their needs, the document may list their doctors, medications, and daily routine. “Often parents know how to help their children, but when they’re gone, the guardian or trustee has no idea what comforts the child,” says Rocamora. This document doesn’t need to be drafted by a lawyer.
Money and health care aren’t parents’ only concerns. They’re also concerned about their children’s employment, social lives, and living conditions. But some are so overwhelmed they fail to plan for a time when they’re no longer in their children’s lives as caregivers, says Robin Shaffert, senior executive officer for individual and family support at The Arc, an organization that advocates for individuals with intellectual and developmental disabilities. She urges parents to engage in what she calls person-centered planning. This means consulting the individual about his or her vision for the future. This process can involve a team, including family and members of relevant organizations.
John Kirkland’s job plays to his strengths and highlights the help of organizations. He found his job through “a fellow church member who works at Park Sterling Bank who realized John had some gifts that might mesh well with the bank. John is very social, and he’s interested in people and what they’re doing,” says Chris Kirkland. “For any child, it’s important to focus on and celebrate strengths and to help navigate weaknesses.” During John’s first few weeks at the bank, an agency called InReach sent a worker to act as a bridge between him and his employer, showing him what to do. Prior to that, upon ending his public schooling, John had taken cognitive and aptitude tests when meeting with his individualized education plan team and a vocational rehab team member. Chris says, “The people who have helped us are earthly angels.”
About the Author
Nick DeCenso joined CAPTRUST in 2014 as a wealth strategy manager responsible for assisting wealth management advisors with the implementation of advanced wealth planning concepts. Prior to joining CAPTRUST, Nick served as a client advisor at Crestone Capital Advisors and has worked in the industry since 2005. He earned a Bachelor of Science degree in economics with minors in international business and Spanish from Saint Louis University. He holds the designation of Certified Financial Planner (CFP®).
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