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Raising a Child with Special Needs

Kids holding handsMany times, families raising children with special needs don't know how to begin their financial planning, says The New York Daily News in a recent article, "How to prepare a financial plan for families with special needs children."
Experts estimate that raising a child to age 18 costs roughly $250,000 and those parents of children with disabilities and special needs will have costs that could be as much as 10 times more. With these types of financial challenges, here are some key areas to focus on to protect and grow your money.
· Assemble a team of experts. That team should include an elder law attorney, doctor, accountant, and government benefits specialist to help you understand Social Security, Medicaid, and other state and federal government programs;
· Draft a letter of intent. This is the child's history, medical needs, doctors, allergies, and likes and dislikes, which can be helpful to guide and direct your child's future trustee and guardian;
· Draft a will. This gives direction to your child's guardian and to the courts as to how assets should be moved and allocated;
· Create a Special Needs Trust (SNT). This will serve as a separate entity for your child to keep money so that he or she isn't disqualified from assistance programs; and
· Create a plan for building assets.
Let's focus on the special needs trust.
Setting up a special needs trust is a fairly straightforward process, but the laws surrounding special needs trusts are very complicated. Don't try this on your own. Hire an experienced elder law and Special Needs Trust attorney.
With a special needs trust in place, you make certain that there's a financial mechanism to continue to provide the child with the highest quality of life possible. Completing a SNT can take a big weight off of parents' shoulders. Many parents wait until it's too late, or they leave money directly to the child. This makes everything much more complicated.
Selecting the future trustee is a matter of determining who will be the right person for the job. It may not be the caregiver. Some special needs trusts use professional trustees or pooled trusts, which are administered and managed by non-profit organizations.
Special needs require special planning. You should work with your team and your family to establish a climate to help you raise and provide for your child. Once created, this will offer you peace of mind in protecting and caring for your family and child.
Reference: The New York Daily News (April 1, 2016) "How to prepare a financial plan for families with special needs children"

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Watch Out for These Changes to Social Security in 2016

Bigstock-Vintage-brass-telescope-on-ant-44347372"Here's what to look for in your benefits check and your paycheck deductions."

AARP gave a thorough run-down on how Social Security will shape up this year in "Social Security Changes in 2016." Take a look at the list:

No Bump. Social Security beneficiaries will not receive a cost-of-living adjustment (COLA) due to low inflation. This is the third time since 2010 that beneficiaries won't see a raise.

Your Average Monthly Social Security Benefit. The maximum monthly benefit for workers retiring at full retirement age is $2,639. The average monthly benefit for all retired workers is $1,341.

No More Claiming Strategies. Many folks in the past used some popular "file and suspend" claiming strategies. They let married couples claim larger Social Security benefits than Congress intended. These will be eliminated, but couples who are eligible now have until the end of April 2016 to enter into a claiming strategy before the loopholes are zipped up.

Medicare Premiums Go Up – for Some. Without a COLA, 70% of Medicare beneficiaries will not enjoy an increase in Medicare Part B premiums. The remaining 30% will see base premiums rise from $104.90 to $121.80 per month.

Disability Benefits Secured. The trust fund that pays disability benefits was about ready to run out of reserves in 2016, triggering a 20% cut for the nearly 11 million beneficiaries. However, over the next three years, more payroll tax money will be earmarked for that disability fund, so full benefits will be secure through 2022.

Reference: AARP (December 8, 2015) "Social Security Changes in 2016"

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Help with Complex Medicaid Planning

Bigstock-Medicaid-Protection-93963323Estate planning frequently addresses property transfers in contemplation of death while elder law considers retirement income issues. While it is easy to consider the two issues in isolation, this is frequently a mistake. This comment briefly provides an incomplete educational overview of some common legal issues that are relevant in both the estate planning and elder law context. Consult experienced professionals in specific situations. For the ordinary person, government benefit programs are an important retirement income consideration. In broad overview, governmental programs may be divided into "means-tested" and "non-means-tested." Supplemental Security Income (SSI) and Medicaid are examples of federal means-tested programs that consider an individual's resources and income. In contrast, a number of Social Security administered programs and Medicare benefits are non-means-tested.

Recently, the Huffington Post published an article titled “Some Legal Issues at the Intersection of Elder Law and Estate Planning.” The article discusses some ethical and legal issues that are very important.

One is whether to dispose of assets through pre-need planning to qualify for means-tested government programs such as Medicaid that might pay, for example, the cost of long term nursing home care. This is very complicated, and you should work with a qualified elder law attorney.

If you want to maximize eligibility for means-tested governmental benefits, a common income reduction technique is to create a Qualified Income Trust (QIT), often called a “Miller Trust.” There are also other types of "special needs trusts" that can be created without reducing government benefits. Again, this is a highly complex area that requires help from an elder law attorney.

Remember the five-year look-back on transfers. Medicaid eligibility usually examines the transfer of assets (like gifts) to third parties that happen in the 60 months prior to the Medicaid application. To avoid this issue, you may be able to create irrevocable college saving plans and also make transfers to your spouse without penalty. A child who lived in the parent's home and cared for the parent—and delaying institutional care in a physician's opinion—may be able to get assets as a gift without a Medicaid penalty under the "two-year caretaker rule." This is also extremely complex and requires consultation with an experienced elder law attorney.

For your family and yourself, do as much elder law and estate planning as far in advance as possible.

For more information about estate planning, please visit my estate planning website.

Reference: Huffington Post (September 22, 2015) “Some Legal Issues at the Intersection of Elder Law and Estate Planning”

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The Little-Known VA Long-Term Care Benefit

VeteranHere's a frightening statistic from the just-released United States of Aging survey:  Only 3% of professionals supporting people 60 and older say they are very confident older Americans will be able to afford their health care costs as they age. The survey was conducted by the National Association of Area Agencies on Aging, National Council on Aging and UnitedHealthcare.

Forbes reports in its recent article, "The VA Program That Pays for Long-Term Care for Vets," that one reason for the 3% confidence rate is the high and increasing cost of long-term care. It easy to see why that is, with the median price of a private room in a nursing home now about $91,000. That's an increase of 4% from last year.

About half of us will someday use nursing home care, and many others will need long-term care in assisted living facilities or at home.

But here's a little good news… there's a little-known Veterans Administration (VA) program that pays for some long-term care costs for vets and their families. It's called the Aid and Attendance Benefit. This benefit has been around for over 60 years and covers some expenses for in-home care, nursing homes and assisted living facilities. This benefit is available to honorably-discharged wartime veterans over age 65 and their widowed spouses who are eligible for a VA pension and require the "aid and attendance" of another person or are housebound. The VA calls this "additional pension benefits for care assistance in the home or in an assisted living community."

Aid and Attendance pays up to: $1,788 per month to a single veteran, $1,149 to a surviving spouse, $2,120 to a married veteran and $2,837 to a veteran couple. The benefit is tax-free. To qualify, the applicant must either:

  • Require assistance with Activities of Daily Living (ADLs) like dressing, bathing,  and eating;
  • Be bedridden;
  • Be a nursing home patient due to mental or physical incapacity; or
  • Have eyesight limited to a corrected 5/200 visual acuity or less in both eyes or concentric contraction of the visual field to five degrees or less

Of course there's the catch: applying for and receiving the money is a real pain in the bottom. The VA estimates it can take on average about five months for an Aid and Attendance claim to be processed after a veteran applies to a VA regional office. Even so, some applicants have been crushed with red tape and much longer waits.

The article tells the story of Frank Fassnacht, an 84-year-old former Disney projectionist now living in a Motion Picture & Television Fund home. He applied for the benefit three years ago, and still no luck. Because of the VA's high turnover rate, it's hard to find a consistent person to help you.

One other thing to note: a veteran may be turned down for the Aid and Attendance benefit if his or her assets are too great. The VA doesn't have a strict rule on how much assets one can have, but it's typically no more than $80,000 (not including your home), depending on age.

The article advises you to seek the assistance of an Elder Law attorney to apply. The rules and paperwork can be a super difficult, so a qualified attorney can really be a help. He or she can also assist you in preserving assets. Also, you should be ready to document your long-term care expenses and provide all the application materials.

For more information about estate planning, please visit my estate planning website.

Reference: Forbes (July 10, 2015) "The VA Program That Pays For Long-Term Care for Vets."

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