Parents of special needs children hope to provide their offspring with financial security and the care they need. However, even with the best of intentions they risk making mistakes that could have costly, long-term consequences for their child.
One such estate planning mistake involves disinheriting the child to ensure their eligibility for key government benefits such as Medi-Cal and Supplemental Security Income. A more valuable option is for parents to set up a special needs trust. The trust can hold assets for their child without jeopardizing eligibility for federal programs. Parents can use special needs trusts to provide their child a higher quality of life that goes beyond the basic needs delivered by government benefits.
Procrastinating is another mistake parents might make. Some parents might choose to wait until their child is between the ages of 18 to 21 in order to have a better sense of their long-term prospects, mental capacity and degree of financial independence. However, failure to plan in a timely manner can mean that the special needs child is left without financial security or a guardian in the event the parents become incapacitated. As a result, it is better to engage in special needs planning sooner rather than later.
Choosing a trustee to oversee a special needs trust when parents can no longer do so is an important decision. When the responsibility falls into the wrong hands, the child may see their wishes overlooked and the special needs plan fall apart. Parents must choose someone who is trustworthy, knows the child and who will act in their best interests. They must also be able to follow trust administration rules and manage the resources available to the beneficiary.
At Gilfix & La Poll, we take pride in innovating new ways to serve our estate planning clients. We recently published an article in Estate Planning magazine covering two ways in which we build beneficial relationships with our clients that address modern, timely issues.
The first is helping clients take advantage of “new economy” services. These are online-based businesses that are exploding in popularity. Many are very well suited to seniors and retirees, but awareness of these services among these groups remains low.
We divide new economy businesses into two categories: “getting help” and “providing help.” The first group comprises businesses that help seniors live productive, fulfilling lives even as their mobility may be decreasing. These include home health and safety monitoring services, transportation services and grocery delivery. The second group allows retirees to earn supplemental income by providing services such as rooms for rent, dog-sitting and transportation using their own vehicles.
We also cover in our article the importance of multigenerational estate planning. Some firms, in an effort to stay competitive, resort to churning out as many wills and trusts as possible, as quickly as possible. They may pay little regard to either the big picture that includes older generations’ estate plans, or the critical details that can make or break a plan.
We take the opposite approach. When possible, we consider a client’s estate plan and that of their living parents together as one comprehensive, carefully crafted strategy. This brings families together and allows us to avoid surprises down the road, giving clients greater peace of mind and allowing them to better care for their parents and/or their heirs.
Planning ahead for long term care and how to fund it can seem daunting. The average American underestimates in-home care costs by nearly 50 percent, according to the Genworth Financial 2016 Cost of Care Study. The findings indicate many adults risk being unprepared for their future needs.
The cost of receiving care has continued to increase significantly each year across all care options, except adult day care. The most expensive long term care option is a private nursing home. Since 2011, the median annual cost for a room has grown by nearly 19 percent to over $92,000.
Americans are also paying more for homemakers or home health aides. Although such in-home services are the most popular care option, nearly one-third of individuals have serious misconceptions about the expenses. Many incorrectly believe such services cost under $417 per month. In reality, the national and state-by-state median rate averages above $3,800 per month.
The annual caregiving survey analyzes state and national care costs. It aims to help Americans become aware of various long term care options and their potential costs. Many people do not understand long term care expenses until they experience them.
“At least 70 percent of Americans over age 65 will need some form of long term care services and support during their lives,” said Genworth President and CEO Tom McInerney. “[There is a] huge disparity between what consumers think costs are and what they actually are.”
As a result, it is important for individuals to have an honest conversation with family members about what type of care they would like to receive when the need arises. Learning about the costs will help Americans plan ahead for future expenses before it is too late.