T H E I R P L A N Y O U R P I E C E O F M I N D Y O U R SPECIAL NEEDS FINANCIAL PLAN JAMES FOX, CHSNC®
Reproduction, redistribution, use and transmission of any information contained in the book, e-book or on any associated website are strictly prohibited. Almost Perfect isn't Perfect - Every effort has been made to avoid errors or omission. Despite this, such things may creep in. We will do our best to remove such mistakes from the book, e-book and website whenever they are identified. Your Special Needs Financial Plan (c)2023, James Fox, and its affiliates and assigns and licensors All rights reserved The concepts, strategies and information in this eBook is meant to give you the answers you need to make decisions confidently for your special needs financial plan. It must also be appreciated that I do not know your individual circumstance. For that reason I am not in the role of your investment advisor, insurance agent, broker/dealer and there is no relationship found in the legal field between a client and an attorney. This should be seen as what it is, a positive. If I said every word in here applied to every person that read it, wouldn't that seem odd? If you would like individual help with your planning that is customized to your concerns, needs and goals you are welcome to schedule an appointment with me for exactly that. THE STUFF AT THE START OF MOST BOOKS 2
INTRODUCTION IF YOU FEEL OVERWHELMED, PAUSE REMEMBER WHY YOU'RE DOING THIS AND READ EACH PAGE AND MAKE EACH DECISION THROUGH THAT LENS Helping special needs families for over a decade has lead me to appreciate how grateful every family I've worked with is for the help I give them. The other side of that coin is that finding reliable help to put a comprehensive plan together is incredibly difficult. There are less than 1,000 professionals in the country that hold the Chartered Special Needs Consultant® designation, the only designation for special needs planning. Compare this to over 300,000 financial advisors in the country. This led me to put this plan together. I call it a special needs financial plan because it takes the same steps I walk families through in my office and puts that information in a way families can apply it on their own. And where it's commonly $500 for an introductory meeting with a special needs planning attorney, the book is about half that cost and filled with every way I've learned to save you thousands on legal documents and financial planning fees while simplifying your finances and setting each piece of your plan up correctly and having those pieces working together. The 3 steps of this plan go hand and hand. The Letter of Intent puts down on paper everything we are planning for and want protected. The Legal section puts the legal documents in place to have legal protection for what you want for your child's future. Finally, the Financial section makes sure your finances are set up in a way to fund the best life for your child and allowing you to retire when and how you want. 3
DEDICATED To Rachel, you're the best part of everyday. 4
Medical Technology Abilities Support Communication Behavior Daily Routine Food Personal Care Personality Education Social / Recreational Hobbies Religion Employment Family Professional Support Letter of Intent Financial Summary The first of two pages allows you to know how much you have, where it is, what it's for at all times. The second page gives a place for your income and insurances that protect what's on the first page. Take your time here. This information will be critical to make use of the financial section Family Summary This section creates a Letter of Intent aimed at protecting the information of the parents that is not covered by legal documents. 8 35 LETTER OF INTENT 38 5
Last Will and Testament Health Care Proxy (HCP) (Financial) Power of Attorney (POA) Beneficiary Designations Documents You Need Special Needs Trusts are "Irrevocable" Trustee 3rd Party Special Needs Trusts 1st Party (Self-Settled) Special Needs Trusts Pooled Trusts Who is the Trustee? What's a Trust Protector? Ways to Create Your Special Needs Trusts (two ways) Key Facts to Know About Special Needs Trusts Guardian Limited Guardian ABLE Account In Home Care Joint Bank Account Representative Payee HIPPA Release Authorization Special Needs Trust / Supplemental Needs Trust Guardian Options and Alternatives 45 59 52 64 Revocable Living Trust Medicaid Trust (Irrevocable) Two Other Trusts You Should Know About How to find and choose? How much? What will I need? Using An Attorney to Create a Trust Special Needs Trust (3rd Party) Last Will & Testament (with Guardian included) Living Will (Advanced Directive) Create Your Trusts Online Right Now 67 75 LEGAL 6
Maximize Social Security Maximize Retirement Accounts Ways to Increase Income Long Term Care Planning How will we need to fund the Special Needs Trust? Funding your retirement and special needs trust Increase Your Income & the Special Needs Trusts Assets How does my retirement look? Simple & Accurate View of Retirement Stage 1 (Year 1-10) - "The go-go years" Stage 2 (Year 11-20) - "The reflective years" Stage 3 (Year 21-?) - "The no-go years" What can we use this information for? Your Retirement Multi-Family Home Staying In the Same Home (when otherwise couldn't) Equity in House Living Arrangement Options 80 92 87 107 104 Where am I financially right now? Are things improving or staying the same? Contributions to Retirement Accounts How much money is spent on things that aren't bills? What do you need each month? Your Finances Spend everything in retirement and still fund the trust Funding with life insurance Funding with life insurance and protect your long term care Get a larger death benefit with survivorship life insurance Funding the Special Needs Trust FINANCIAL 7
Share who they are Name Personality Daily Routine Preferences Independence Hobbies Education Religious Employment Where to Support Family Support Key People Professionals Advocates info Only a caregiver would know WRite them a letter During this time, sharing food with your classmates must be avoided because it can possibly cause viraltransmission. Keep it up to date Letter of Intent How to: 8
Take Your Time 4 Steps What’s important to know about the Letter of Intent is that it should not be filled out the way many fill out forms handed to them on a clipboard at the doctors office (Quickly and without much thought involved). You’re not looking to cover the basics. You’re looking to give a rich and full view of what life is like today from all angles. You want the person reading it to have a clear picture in their head of what life looks like. Go slow. You shouldn't finish in one sitting. Get others input. and use the following approach... Read through the Letter of Intent without filling anything out. Slowly start to fill it out while having a discussion with your partner or any other key people (including your child when possible). Over the following days, keep a notepad in your pocket or on your phone and write down everything you do to support your child throughout the day and why you give that support the way you do. It's probably done in a way that's been refined over the years. View the Letter of Intent as a "living document." Like with the rest of the plan, sitting down once a year for an hour to review is time well spent. 1. 2. 3. 4. LETTER OF INTENT 9
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Financial Summary For things like life insurance, I can count on one hand the amount of people that know the type of policy, it's death benefit, premium and cash value off the top of their head (accurately). Call the company. Get the info and make sure your beneficiaries are who you want them to be. Take your time. Don't estimate. Look up the information. Your plan isn't better by finishing it faster. It's better by putting thought and energy into each step you take. Don't fudge numbers. If there is a number that is painful to write,...the choice of writing the number vs. fudging it will likely save your thousands of dollars over the course of time. Writing the real number is what people with with financial household made of bricks do! The next two pages I consider incredibly important. The first page puts on one clean page all the accounts, assets and debts you have. You see at the end of the day if you're in the positive or negative. When you review your plan each year, it'll take less than 10 minutes to update the numbers. A lot of people think they know where all there money is and that it's in the right place. This makes sure it is. The second page has all your incomes today and in the future. This is in addition to any insurances protecting the assets you have on the first page. The section immediately after the next two pages is your “Family Summary.” This isn’t a direct part of your special needs financial plan. I added this so you have one spot where a lot of overlooked important information can be held. You can tell whoever would step in if something happened to you where to find this document and it will make their stressful task a bit easier. 35
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END OF YOUR LETTER OF INTENT HOW DO YOU KNOW IF YOU'RE DONE? » All contact information for professionals you rely on is filled in » Everyone that is a key person in your child’s life has had the opportunity to contribute what they know to the LOI » You’ve taken an inventory of everything you do that provides support and considered who may fill those shoes in your absence » If possible, you’ve included your child as much as possible to get answers about them, from them directly » You’ve written a letter to your child » You’ve written a letter to someone that is a caregiver for your child 44
Why people don’t have legal documents put in place usually comes down to two reasons. First, they don’t have confidence of what document is needed to do the thing they want done. This will get cleared up today. I’ll clear that up for you and let you know in plain English, what each document does (and doesn’t do). Second, sitting down with an attorney takes time and effort. I don’t say this jokingly. Everyday there are 48 hours of things trying to get done in the 24 hours you have. If you don’t already know an attorney that handles estate planning there really isn’t a universally accepted way of finding an attorney,…understanding what is a fair price or what the process should look like to get your plan put in place. Further complicating things, attorneys specialize in different areas. The attorney that reviews the contract for a multi-million dollar business deal likely isn’t the same attorney that should represent you if you’re arrested. I’ll clear all that up to. Once you are familiar with the documents and their purpose it’s significantly easier to set up your legal documents online. I’ll walk you step by step through how to do that showing you where to click and what questions that initially seem confusing are asking about. If you wish to meet with an attorney in person, that’s fine too. I’ll give you specific steps to hire one that is qualified for what you need and share how to get the most for your money. LEGAL 45
In a Sentence or Two: A Will is the legal document that states who receives everything other than what has a beneficiary designation (discussed a few pages down the road). In the Will you can also include who you designate as your child’s Guardian if you die and instructions to have a trust created after your death. Do I Need One? If you own real estate this is what’s needed to make sure your house and other assets go to the person you choose. A beneficiary designation overrides what the Will says though for life insurance and investments. Anything that doesn’t have a beneficiary designation goes where the Will tells it to go. You’ll find beneficiary designations on investment accounts and life insurance policies. Even for married couples it’s a very good idea (each spouse needs their own). Having a Will takes a time that will regardless be emotionally difficult and minimizes how financially difficult settling your estate will be (having things you own go to other people). If you have a child with special needs under 18, if you don’t have guardianship paperwork filled out elsewhere, a guardian can be “written into” your will. If something changes where you want some- one else listed, you can change your Will at anytime. If you do, make sure to destroy the old one. If you have your Will stored with a county office where you live, make sure to get that back too and replace it if you want. The person who handles “settling your estate” makes sure what the Will says to do actually happens. Make sure the person who is the “executor of your estate” has a copy or access to your Will. The “executor” is the person who “settles your estate.” They don’t make any judgement calls. Their role is to carry out your wishes as they are listed in your Will. Avoid keeping your Will in a safe deposit box at the bank. Why? Because once notified of someone’s death, the safe deposit box is generally locked until the bank has a copy of the Will instructing them what to do with the boxes contents. Last Will & Testament 46
If you already have a Will and it’s up to date, just because it’s old doesn’t mean it needs to be replaced. Generally you’ll only need to replace it if you want to make a change to it. An example of this would be by including a “testamentary special needs trust” to your Will. This is where your Will instructs your executor to create a special needs trust when you die. The other option for setting up a special needs trust is to create a trust while you are alive. This would be written as it’s own document. We’ll cover trusts in a bit. States have their own rules for what makes a Will valid. Generally speaking, the person must be 18 years old and “of sound mind” when they sign the Will. This means no one is forcing them to sign a Will they don’t agree with or for a medical reason they aren’t making decisions they otherwise would normally make. It's also generally required to have 2 witnesses present when you sign your Will. It is usually required that the signatures for everyone are notarized. If it's not required, I highly recommend you have them notarized regardless. If you don’t have a Will it can accomplish quickly and easily a lot that your special needs financial plan will need. The Will can indicate who you want to be the guardian of your child. It can instruct your executor to set up a special needs trust to hold the money and assets meant for your child to benefit from (“be the beneficiary of”). It also can direct where everything you own (other than investments and insurances) goes after you’re gone. It’s easy to associate legal documents with involved complicated documents with small print and many pages. Sometimes that is what’s called for. Many times it isn’t. Although this can take care of a lot of the heavy lifting with your special needs financial plan there are other documents you'll also want to have. Last Will & Testament 47
In a Sentence or Two: A Health Care Proxy (HCP) gives the person you name the right to make medical decisions if you are unable to (often due to an injury, but not always). The HCP covers everything with the main exception being that it does not give someone the right to “pull the plug.” That document is called a “Living Will (or advance directive).” Do I Need One? You aren’t required to but it’s easy to set one up and very good to have one. If you want someone you know to make decisions of the care you receive, then “yes.”. When you go to a hospital to receive treatment they will generally have you sign one although usually their isn’t much of an explanation of the document when this happens. When you create one make sure the person you name as your health care proxy knows they are that person. Give them a copy of the document. If they don’t know they are your health care proxy it’s of no use to have the document in the first place. If you get a Will created with an attorney they will often include a health care proxy and power of attorney paperwork with the Will. You can change who you select as your health care proxy at any time for any reason. Health Care Proxy 48
In the context of estate planning, adults will most often name their spouse as their “Springing” POA when they get their Will drawn up. In special needs planning, a durable POA can be used as a way to give independence where someone might otherwise move to become a guardian. If your adult child is able to live independently if another person takes care of financial matters a Durable POA is probably good solution. If your child is an adult and unable to make legal decisions for themselves you’ll need to obtain a power of attorney through a court. This is because they are considered not to have "capacity" to understand the document they are signing which gives you power over their affairs. In a Sentence or Two: A (Financial) Power of Attorney (POA) form allows you to give someone else the authority to make financial decisions and carry out financial transactions. Although you can withdraw the power at anytime while in force it is an authority that is unchecked. It can’t be overstated to only give this power to someone you trust to use that authority to carry out your wishes, not their own. Two Types of POAs A “Springing Power of Attorney” springs into action so to speak by being active only if you are incapacitated. Even if the form is legally drawn up but you are alive and well, a Springing Power of Attorney cannot be used. A “Durable Power of Attorney” gets it’s name because it is durable enough to work while you are alive and well and if you become incapacitated (ex. being in a coma). All Power of Attorney forms becomes invalid at the time of your death. In addition, you can limit the authority to only the things you wish. This could be set up to allow your attorney to sign for you at the closing when selling a property if you are out of town. You can also give someone complete control over your finances. In this situation, a person can sell your house or empty your bank account. Power of Attorney 49
Listing Your Estate as Your Beneficiary This is something to avoid for a few reasons. First, it’s easier and cheaper to change your beneficiary on a company’s form compared to rewriting your Will. Second, some accounts require that all taxes owed by that account must be paid when the account transfers to the estate. This does not happen when you leave the investment account directly to the person you want to receive it. The beneficiary form on non-retirement accounts has it’s own name. It’s called the Transfer on Death (TOD) form. These accounts are good to leave to specific people. The reason being that when the investments transfer, all taxes (on the growth the account has) is eliminated and you start the account as if you purchased the investments the day of the previous owner's death. This is what’s called getting a “step up in cost basis.” The cost basis is what you paid for the investment and the investments basis steps up to it's actual value on the date of the previous owner's death. In a Sentence or Two: On investment accounts and life insurance policies you make a beneficiary designation. This is the person (or persons) you wish to receive the account or death benefit. You can list multiple people and designate the percentage you want each person to get. Most accounts will ask you to list a “contingent beneficiary" too. This is the person(s) who will inherit the account/death benefit if the primary beneficiary “predeceases you." Put another way, when the primary beneficiary is dead at the time of your death. Do I Need Them? Yes. For all accounts with money in it that can be invested there is a beneficiary designation. In the absence of a listed beneficiary, companies now commonly have a default beneficiary listing which goes in the following order from first to receive the money and if they predecease you the next person (Spouse, Children Equally, Parents, Aunt and Uncles equally). Your beneficiary designation states who gets the money. Whoever you have as the beneficiary on the account overrides whatever your Will says. This is true even if your Will is more recent. When leaving money to a trust, it's critical to change the beneficiary to the trust, rather than the beneficiary of that trust. Beneficiary Designations 50