September 2022 Newsletter |
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The Funding Issue
Funding Your Special Needs Trust:
Pitfalls and Opportunities Ahead
Phew, we did it...school is back in session! Take a few minutes to enjoy the peace and quiet and pat yourselves on the back for getting through summer. Everyone gets a fresh start - the kids at their schools, and you, as parents, get an assignment from us: give your Asset Inventory a fresh look.
Those of you who are already our clients remember the dreaded "Asset Inventory", where we ask you to list your accounts, life insurance policies, retirement plans and named beneficiaries in glorious detail. For some, it's a treasure hunt, looking through old files and documents, discovering who is named as beneficiary, and sometimes finding a forgotten asset(!) And sometimes there are surprises, like realizing you may not have beneficiaries named at all, or worse, that an ex-spouse may still be listed! For others, completing the Asset Inventory is a refreshing process, knowing that your hard-earned holdings are accounted for and up to date. In our planning process here at the Firm, we use this Asset Inventory to ensure your accounts are correctly connected to the strategy we have designed for you. We call this the "Funding Process".
When special needs and estate plans are properly "funded", government benefit eligibility is protected and preserved, probate is avoided, and estate administration is more efficient and economical. When funding goes awry, the results can be disastrous. Our clients with special needs "accidentally" inherit, causing disruption to their benefits, funding, and the need for additional planning. For others, the probate process will be required.
The Funding Process is a part of every planning project we design, but you can (and should) do a self-audit of your assets every few years to ensure new assets properly correspond to your plan. Moving, changing jobs, getting married, divorced, having children, retiring, or establishing a special needs trust are all important milestones that indicate the need to take a fresh look. Give us a call if you'd like to learn more about Funding or how to conduct a self-audit.
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Funding Opportunity: Second-to-Die life insurance
After families complete the special needs planning process, including the creation of a Special Needs Trust, they ask us "How much should we set aside for our child?"
If we only knew that magic number! Securing foundational government benefits like SSI, SSDI, Medicaid and Medicare are critical first steps. Funds in your child’s Special Needs Trust then provide for quality-of-life expenses like special equipment, alternate housing, electronics, vacations, and other outings, to name just a few.
How can parents raise funds for a Special Needs Trust to help with these extras when they are already working hard to save for their own retirement? What if the planned retirement savings must be stretched to pay for retirement or the costs of illness or long-term care? With people living longer, adequate retirement savings are a widespread concern.
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A uniquely perfect solution for special needs parents is a “Second-to-Die” life insurance policy (also referred to as a “Survivorship Policy”). This policy covers both parents and pays out only after both parents die. The funds can then be deposited entirely into the Special Needs Trust that you established for your child’s needs. For folks who need an alternative way to save for their child, or who will need to use their savings for their own retirement or long-term care, a Second-to-Die policy is a valuable tool.
Other benefits of a Second-to-Die life insurance policy include no expiration date (remember, “term” life insurance expires), it is more affordable than insuring each parent separately, and those with existing health conditions can be considered for coverage.
For parents who struggle with how to fairly distribute their estate among their children, even though they know their disabled child truly needs more than an equal share, a Second-to-Die policy might be the answer. Parents can still divide their estate equally to address their view of fairness among their children, then use a Second-to-Die policy to provide an additional amount to their child’s Special Needs Trust.
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Some of our clients who receive room and board payments for their disabled child use these payments to pay the premiums for a Second-to-Die policy; others think of the policy premium payments as saving extra for their child, since the savings grow into a future payout for the Special Needs Trust.
We encourage our clients to explore this clever strategy to build a nest egg for their child’s Special Needs Trust. Please ask your special needs financial advisor about his unique strategy.
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📢 Upcoming Events and Resources
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Wednesday, September 14 at 11:00 AM
This is a free virtual job fair in Rockford, IL on Sep 14, 2022 including hiring managers from local and national organizations on the hunt for top talent. Job seekers can sign up, show up, chat with key decision makers, and get hired. Register online!
Address: 3482 Pyramid Drive, Rockford, Illinois 61109
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Saturday, September 20 at 7:00 PM
Come join us to mingle and learn about community resources ranging from dance/athletic organizations, therapeutic resources, wheelchair accessible transportation, life and legal planning, and special services with the Downers Grove Public Library and Recreation Center. Click here for more information!
Address: Loyal Order of Moose, 1030 Warren Ave. Downers Grove, IL, 60515
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Monday, October 17, 2022
The Options Fair 2022 will be hosted at Downers South High School. An "Options Fair" is a post-secondary planning night for students with disabilities. If you have a student in high school, this is a perfect fair for you! You need not be a student in the district to attend. Please stop by our table to say hi!
Address: 1436 Norfolk St., Downers Grove, IL 60516
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October 20-21, 2022
The IAASE is holding its 23rd Annual Fall Conference at the Tinley Park Convention Center! Katie Clancy and Jennifer Sabourin will be presenting to Special Education Administrators throughout Illinois at this annual conference. Our firm hopes to spread the word about Transition Planning and how Special Education Administrators and IEP Teams can help families prepare for government benefits and guardianship, as well as other important decisions they will face. Click here for more information!
Address: 18451 Convention Center Drive, Tinley Park, IL 60477
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Violet brings a variety of experience from both the legal field and the non-profit field, having worked in family law and in domestic violence legal advocacy. Her passion for helping others through her work has led her to our team, where she strives to assist families with navigating challenging and emotional processes. We are excited to have another hard-working and passionate member of our team!
Violet earned her Bachelor of Arts degree from the University of Illinois at Chicago in both Psychology and Gender and Women's Studies. Outside the Firm, Violet loves to read, watch movies, and enjoy her partner and their cats, family and friends. Welcome Violet!
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Private retirement savings plans, like IRAs and 401(k)s, have become the main way for American families to save for retirement. But parents of children with special needs need to be vigilant when signing up for a retirement plan or company life insurance program.
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Many families of individuals with special needs want to foster their loved ones’ independence. Some may find that their loved one is happiest with a personal living space, as independent living offers greater autonomy. However, several barriers prevent many adults with special needs from living on their own. Learn more here.
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Living with a disability is tough enough, but so is obtaining income support through Social Security Disability Insurance (SSDI) — especially without help from professionals who know how the system works.
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If you are like most people, you didn't assemble your special needs plan all at once. Now all of the documents that make up your special needs plan reside in various envelopes "strategically" placed in different drawers or folders all over your house. While this filing system may make perfect sense to you, it could be a nightmare for your loved ones if something happens to you.
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Planning for individuals with special needs and their families. |
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Clancy & Associates Ltd. is Illinois's only full-service special needs planning law firm dedicated to supporting individuals with special needs and their families. Our mission is to help families protect and empower their loved ones with a disability through streamlined, comprehensive planning. We use our innovative full-service approach to both identify opportunities and secure solutions and benefits for our clients at our Firm. We “keep watch” for families so they can attend to the daily priorities of their loved one’s life and leave the legal planning to us.
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Connect with us on social media and tell your friends about us! |
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