Financial Planning for a Family Member with Special Needs
Having a child with special needs presents unique challenges. You may worry about his or her physical and mental wellbeing. You may also worry about their financial future if their condition limits their ability to earn a living and pay for living expenses upon reaching adulthood. Fortunately, there are steps you can take to help ensure your child has sufficient financial resources along with a dedicated support system. Here are six strategies to help protect your child’s future.
Fund an ABLE account. Thanks to The Achieving a Better Life Experience (ABLE) Act of 2014, families can participate in a tax-advantaged savings program for a family member with a qualifying disability that occurred before age 26. As the owner
and designated beneficiary of the account, your child can withdraw funds tax-free to pay for eligible disability-related expenses. They also may be eligible for a tax credit for contributions you make to the plan.
An ABLE account is very similar to a 529 college savings plan. Anyone can contribute to the ABLE account, including grandparents and non-relatives, up to the annual gift tax exclusion (unless limited by your state). Contributions are made with aftertax dollars and are not tax deductible at the federal level. Some states do allow contributors to take state income tax deductions. Not all ABLE plans are equal; shop around to find the most advantageous plan for your child’s needs.
Establish a special needs trust. A special needs trust (SNT) can provide financial security by creating an income stream to a loved one with special needs. Having funds in this type of trust would not disqualify your child, as beneficiary, from receiving government assistance. Note that he or she would not have direct control over funds in an SNT, which may not be ideal if he or she is capable of managing their own finances.
There are several different types of SNTs (first-party, second-party and pooled); each of which is governed by various requirements. Because of their com-
plexity, SNTs are usually prepared by a licensed attorney and may cost several thousand dollars to set up.
Buy a life insurance policy. Consider purchasing a whole or term life insurance policy that names your loved one as the beneficiary when you die. To ensure the payout does not disqualify the recipient for federal and state resources, set up the policy to pay proceeds into a special needs trust.
Ask the courts to appoint a guardian. When an adult family member with special needs has significant assets or property and is unable to manage their own financial affairs, a guardianship may be appropriate. When a guardian of the estate is appointed, all financial matters are managed for the person with disabilities. This person will pay bills and is required by law to maintain detailed records to account for all spending. A family member is often appointed to this role; however, in some cases the court will appoint an unrelated individual.
Watch out for scammers. Individuals with disabilities may be more vulnerable to identify theft and other scams. Monitor credit reports to keep an eye out for unauthorized accounts. Consider enrolling your child in an identity theft protection program. Be aware that phone and internet scammers routinely target
recipients of government checks by impersonating government agents.
Consult the experts. Talk to your financial advisor for ideas and guidance on ways to safeguard the financial well-being of your special needs child. Your advisor will be able to recommend a qualified attorney if you decide to open a special needs trust. A tax specialist can also be a valuable resource to help with tax planning for you and your child.
Duane J Lusson, CFP, ChFC, CLU, MSFS, is a Private Wealth Advisor with Ameriprise Financial Services, Inc. in Ottumwa, Iowa. He specializes in fee-based financial planning and asset management strategies and has been in practice for 30 years. To contact him, call 641-684-4200 or stop by his office at 527 W. Second in Ottumwa, Iowa.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situ-
ation.
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New Boots
I am often asked why I moved north in my fifties, a time in life when many people want to move south for the warmer climate. The answer is simple: I don’t do as well with heat, especially combined with high humidity. The snow and cold weather are a big part of my moving north. Both enhance a fantastic place in the world, the north shore of Lake Superior; I love it. Even ice is beautiful and valuable (aside from storms.)
Ice allows the lakes of northern Minnesota to become small seasonal villages. People move ice houses and shanties onto the frozen lakes, creating small fishing communities. Snowmobilers, cross-country skiers, ice skaters, and dog mushers take advantage of these wide-open, frozen spaces. Let’s not forget hockey. Without ice hockey would be more like playing soccer with sticks and a flat rubber biscuit. Ice becomes art at the hands of sculptors, but the earth makes some of the best ice sculptures.
The water movement in Lake Superior is powerful enough to break massive sheets of ice. The waves push the broken ice to the shore, causing it to pile up vertically. These ice shards are spectacular to see.
When ice storms hit, they turn the land-
scape into a magical scenery.
People hurry to get photos of the beauty (or damage) before the ice is gone. Despite its beauty, ice can be very destructive, snapping branches, breaking trees, and taking down power lines, leaving homes without electricity in harsh weather conditions.
Fortunately, the north shore gets a lot more snow than ice. We’ve had an exceptionally large amount of snow at home this year, and I feel like I’ve missed the best of it. Even though I love to travel, I don’t like leaving the special place we call home.
In mid-December, I headed south to help with a project for two weeks. Unfortunately, we didn’t finish the job, so I returned to Florida in January. The project grew, and I had been there for eight more weeks before I knew it. When we were finally done, I was ready to go home.
While we were in the sunshine state enjoying the mild weather, my wife’s aunt and uncle called, telling her that Austin, Texas, was hit with its worst ice storm in history. They sent some pictures of the storm; as is the case with all ice storms, there was a natural beauty to the ice. But, unfortunately, the heavy ice did a lot of damage. Meanwhile, I called a neighbor at home who said
we had just received another two feet of snow. So, we deviated slightly off the trail going home (1,115 miles) to help clean up branches.
We arrived in Austin on a Friday. Melissa and I were in awe at the damage to trees caused by the ice, so we started right into work. Every time I moved a downed branch, more were hiding behind it. The hillside terrain was rocky, with a lot of sticks and leaves on the ground. I didn’t have the proper footwear for the work, just an old pair of sneakers, but I figured I would be okay – as long as I didn’t twist an ankle.
“It’s getting to be the time of year for the snakes to wake up,” Kenny said. “Snakes,” I said?
“Yeah,” Kenny replied. “The rattlesnakes and copperheads are just starting to come out of hibernation.” (Another reason I like living in Minnesota.) “You don’t have to worry about the big rattlesnakes,” Kenny explained. “It’s their babies that will get you.” That didn’t make me feel any better. “The babies shake their tails just like the big rattlers, but they don’t have rattles. So, you don’t hear their warning – they just bite you.”Although I don’t know why I felt I’d be okay working the rest of the day.
“You won’t even see them,” Kenny went on. “They hide under the edge of those rocks, blending right into the leaves and sticks.”
I looked down at my feet. With sneakers, I lacked ankle support and had no protection from these slithering venomous serpents. I grabbed a log and pulled it up the hill to the driveway. As I knelt to cut the log into eighteen-inch pieces, I saw the leaves move, but I didn’t see what moved them. Remembering Kenny’s words, ‘You won’t even see them,’ I was a bit nervous. I took a twiggy
stick to poke into the leaves.
Just then, I saw what caused the movement. “It’s just a scorpion,” I said. “A SCORPION,” I repeated (loudly.) I might have screamed like a little girl and maybe wet my pants a little, too, as the poisonous spider made its way toward my leg, particularly my bare, unprotected ankle.
As I jumped, I hon-
estly questioned, “Just how bad can it be shoveling two feet of wet, heavy snow, in single-digit temperatures, even in a pair of old, worn sneakers? At least the snow won’t bite or sting me.” Rather than complaining about the little bug, I told my wife, “I need new boots.” When we get home, I can use them for shoveling snow.
The Anxiously Awaited Arrival of Spring
The past week or so, I have noticed gobblers alone or in groups of two or three. They have spent all winter in bachelor groups and are now ready to stake out their own territory. Even more sure than spotting the first robin, or the days
getting longer, the sight of a tom turkey alone is a sign of spring. It is not that I do not believe robins, but I have seen more than one hunched up with his back to a raging blizzard. They may think they know when to migrate north, but they are sometimes surprised, cold, and hungry.
There is something about a turkey you can trust. Viewed up close, they are not particularly attractive with their multi-colored bumpy head and neck. They also have the disadvantage of being mighty tasty. If something is ugly and tastes good, it must be smart in order to survive in this world. I vote for the solitary tom as the first sign of spring and spring is the very best time of year.
Spring is the time waters open for fishing, the birds migrate back to nest, but best of all, spring turkey season
is just around the corner. I enjoy all types of outdoor activities, from the relaxing aspects of fishing to the craziness of paragliding off mountains and everything in between, but the best a person can do is to hunt the old turkey gobbler during the spring season. I have sat on a wet log behind a thorn bush with the cold rain beating down on me only to have a big old gobbler sneak up behind me and scare me half to death with a loud gobble from a few feet away. There is a thrill when the prey gets the better of the hunter. A person remembers times like this, since so rarely does a person get so startled in the outdoors. I have been in a blind in a comfortable chair on a warm sunny day with my son and grandson when a gobbler walked in front of us. I can honestly say, I do not remem-
ber if we got a bird or not. I do know, all three of us will remember the experience. The green grass, warm sunshine coming in the tent, and a turkey a few feet away, checking our decoys will be etched in our minds as we all watched intently. More than once, I have sat with one of my sons in the early morning light, talking in hushed tones, as gobblers called from the trees and the hens answered from the ground. The adrenalin flows and the excitement mounts as we watch for a gobbler to
fly down. In the dim light the faint shadows appear as the light grows brighter and the feeding birds get closer. A tom rattles off a gobble and struts into view. Times like this are remembered for a lifetime. Sometimes you get your bird, and sometimes you don’t, but the hunt is always there. It is about being there during the early days of spring. It is even better if you have a chance to share this special experience in the outdoors with family or friends.
