INSIDER'S GUIDE TO SPECIAL NEEDS PLANNING

Penny Canada, CFP Special Needs Planning Consultant [email protected]

Blue Lantern Planning is an Independent Investment Advisory Representative Practice of Garrett Investment Advisors, LLC. Blue Lantern Planning also offers Investment Advisory Services offered Garrett Investment Advisors, LLC, a fee-only SEC registered Investment Advisor. Tel: (910) Fee-Only Our 'Inside' Story -

3 Children, Same Goals

Friends, A job, A home, Life THEY envision, Happy, Safe & Well Cared For The Challenge

$233,600 vs $1,400,000 -$2,400,000 'Typical Family with a Special Needs Child'

Hospitalizations and Surgeries, Therapies, A lot of time coordinating needs & various funding sources/plans and care; 'underemployment' to allow for flexibility & aging parents' needs. Legal Planning

COMPONENTS OF FInancial Planning SPECIAL NEEDS PLANNING Resource Planning Life Planning

Legal Planning: ; ; Guardianship or Alternative Financial Planning> Benefit Eligibility, Financial Support, Trust Funding Resource Planning> Public Assistance (School Services, Case Worker, etc); Private Pay Life Planning > Vision of Rightful Place in Future, Friends, A Job, A Home THE PLANNING TOOLS:

Special Needs Trusts 101 Planning 'Game ABLE Accounts Government Benefits (SSI, SSDI, Medicaid Changers' Based Services) Estate Planning & Guidance Private Pay Resources & Alternative Funding Resources Special Needs Trust Options - First Party Trust Case Study (D)(4)(A) = 'Payback Trust' = 1st Party Trust / 1st Party Special Needs Trust = Medicaid Trust = Self Settled Trust

Grandparents' Inheritence - Transferred by Will

Assets: Traditional IRA > Taxed Prior to Putting in Trust & ABLE Account UGMA Account > Assets transferred in-kind due to current year burden. Personal Savings > ABLE Account

Age: 27 Planning Done Prior to age 27: Grandmother's Will Planning Needed: 1st Party Trust; ABLE Account; Power of Attorney: Medical & Financial Apply for Government Benefits: SSI, Medicaid, County Mental Health Svcs Initiate Michigan Rehabilitation Employment Services

Ongoing /Next Phase: Housing Support Services Ongoing Lifeskills: Employment, Budgeting, Sexuality, etc. Expand Circle of Support to support goals & needs Annual ABLE contributions for tax free growth annually Investment Assistance with ABLE Account and Trust Account Guidance for Trust & ABLE account re: use, qualified expenses & conserving assets Special Needs Trust Options - 3rd Party Trust Case Study Supplemental Trust = 3rd Party Trust = Special Needs Trust =

Parents had 'The Drew Canada Discretionary Trust' created 15 years ago

> Our Family Trust accidentally remained UNFUNDED for several years. > Grandparents were given a letter w/ correct Trust Language if they desired to plan for Drew. > Amended Trust - including see-through language for IRA 'stretch provision'

Revocable Trust will become Irrevocable upon last parents' death. Siblings are beneficiaries.

Funding: Life Insurance - Tax Free Portion of Family Assets, after Parents' Death Age: 24 Planning Done: Special Needs Trust ABLE Account Power of Attorney for health, finances and Education Burial Plot Purchased Benefits in Place: SSI, Medicaid, Private Health Insurance, County Mental Health / Long Term Care Services. Adult Home Help & Michigan Rehabilitation Services. Medicaid funds Private Duty Nursing, staffing & case worker.

Next Phase: Housing Support Services and Funding; Funding for Employment Care; Ongoing Life Skills re: Caregivers / needs. Care Management Defined/Developed (Private Pay); Involve Siblings more. Create Training You-Tube Channel?

Special Needs Trust Comparison Issue Third Party SNT FIrst Party SNT

Established By Third Party Parent, Grandparent, Guardian, Court or Someone w/ Authority to Act for Beneciary

Funded by Assets of Third Party Person with a Disability

Beneciary Person with or without a Disability; Heirs per Trust Person with a Disability; Medicaid Payback; Family Members of Beneciary Estate

Grantor Trust Can Be Yes

Grantor Can Be No

Discretionary Yes Yes

Inter Vivios Yes Yes

Testamentary Yes No

Revocable Can Be No

Gift Tax Annual Exclusion Can Use Cannot Use

Estate Tax Can Be Excluded Includable

Distributions Payments to Third Parties Payments to Third Parties

Disability SSA Denition SSA Denition

Pay Back Provision No Yes

Medicare Claim No Yes

Medicaid Lien No Yes

Age Limit None Under 65

Qualied Disability Trust Yes No Comparison Criteria ABLE ACCOUNT POOLED TRUST (1st or 3rd Party) Eligibility Onset of a signicant disability before age 26 Disability or Moderate Impairment; 1st Party - before age 65

Allowed One Account May have multiple 1st and 3rd Party Accounts Accounts

Account Opened 1st: 1st Party or Authority over funds; 3rd: Anyone except Individual, Parent, Guardian or POA Agent By beneciary

As determined by Trust Administrator; Food & Housing may No Allowable Use For Qualied Disability Expenses without penalty generate issues; Administrator provides oversight and manages Limit. funds.

Startup Cost $0, There may be a minimum deposit Yes, typically $200 -$1,000

Minimum Avg. $0-$50 Yes. Typically $2,000-$10,000 Contribution

Annual $15,000 total from owner, family, friends, employer, Special Contribution Needs Trust (SNT). SNT or Pooled Trust may make contributions No Limit Limit up to $15k

Earnings up to $12,140 allowed if owner/employer do not Additional contribute to an employer sponsored retirement account in Some pooled accounts allow for beneciaries to contribute Contributions calendar year. Alaska and Hawaii have higher earning earnings. Allowed threshholds; additional savers credit allowable if qualied.

Maximum Varies by state: $100,000-$529,000; Michigan >$100k SSI Not Applicable Holdings suspends

On-Going Avg $200. A fee schedule should be available; Enrollment and Management Costs are nominal; Avg $0-$60; Vary by State ABLE Program. Admin. Fees almost always higher than ABLE accounts and lower Fees than for-prot Trust services.

Medicaid Yes, if applicable. Funds can be used for Funeral, burial and Varies for each Pooled Account. Generally Non-prot permitted to Payback Upon qualied disability expenses before payback. retain some of funds of 1st Party; 3rd Party Varies. Death Special Needs Trust Coordination & Estate Planning

SNTrust & ABLE

Don't Supplant! SSI & Family Order of Use with Special needs trusts pay for comforts Beneficiary Changes Multiple Savings Tools Designation and luxuries -- "special needs" -- that could not be paid for by public Special Needs Trusts Social Families need guidance if multiple trusts This is a critical part of assistance funds. This means that if Security Rules change over and / or an ABLE account is in use. planning. Trusts need 'stretch money from the trust is used for food time. Reviews are important Basic Rule of thumb - use up government- language' for IRA benefit. or shelter costs on a regular basis or re: Use of, Legal Language, payback assets first. Relatives need to know distributed directly to the beneficiary, and Trustee(s). Annual review Balance ABLE contributions with Medicaid proper SNT name. ALL payments will count as income to the of , beneficiaries etc. assets need proper beneficiary. Payback Use to conserve family assets . is recommended. Government and Tax Benefits SSI, SSDI, Medicaid, Adult Home Help, Michigan Rehabilitation Services, Public Education, Private Education w/ Public Services, Person Centered Plan for Long Term Care Benefits

Local, State, Federal Complex Rules. 'Hidden Menu' Minimal Resources for some; Greatest Needs = Greatest Services. Benefits Wax and Wane: Plan yearly + Long Term

Public Services can be a wild maze. Advocacy Agencies save time and money for families...Knowing how and where to guide families adds tremendous value. FUNDthe PLAN Other Planning Tips

Ongoing - Listen - Full Funding of Lifestyle. Where have they been? Their Story Full Circle of Support. Where are they headed? Re-envisioning life in the Vocation/Purpose; Housing; Therapies community 'Tough Clients' - Coaching Calls' -Keep Families on Track

KEY PLAYS - Starting Points - Community vs Isolation -Help with Special Needs Trust Connections/Mentors Adult Housing Problem solve for the current & ABLE Account upcoming stage for the best Planning for Current Needs outcome / Resources. Counsel/Refer Families past Fears