Special Needs Planning
This is the fourth installment in a number of articles which are based upon my book Special Needs Planning: A Simple Guide for Families in New York with a Loved One with a Disability published by Graylake Publishing and released in October, 2014. The book is a response to inquiries from family members and those who support them about how best to provide for a loved one with a disability. While my primary focus is the legal aspects of the process, I have realized in my work that the process for providing a secure future for a loved one is far broader in scope. This installment will explore the second element of a AVision for the Future.@
The second element of envisioning the future is the financial plan. Financial planning is accomplished by a care giver and his or her circle of support when they explore ways to realize on the financial resources inventoried by resource planning. It is never too early to begin financial planning! For instance, if your financial plan involves life insurance, the premiums for a whole life policy are smaller and more affordable the younger you are when you take out the policy. Similarly, a systematic plan of saving for the future will yield greater results if started early, through the simple dynamic of compound interest. For example, $50/month saved from the date a loved one is age two will yield $31,394 more at age forty than if the program is started when the loved one is age twelve. Even after you subtract the $6,000 in monthly installments added from age two to age twelve, the loved one will still be $25,394 better off!
Persons instrumental to the finance plan are the care giver=s accountant, financial planner, investment advisor and insurance professional. A care giver should endeavor to recruit one or all of these advisors into the Acircle of support.@ Each advisor has a different but equally important role to play in realizing on the financial resources available to the care giver. The care giver should be explicit with each advisor and share with the advisor the care giver=s goal of providing for family as well as a loved one with special needs.
An accountant is always a resource to navigate the confusing and complex Internal Revenue Code. One way to increase current cash flow is to take advantage of all the legal deductions available to a wage earner supporting a person with a disability. This involves more than Adoing taxes!@ It includes a fair amount of planning and a degree of sophistication found only with a certified public accountant; preferably one with experience advising families with a loved one with a disability.
A care giver should seek and select a financial planner with the training and experience required to fully advise on the intricacies of financial planning and the products instrumental to realize on those plans. A financial planner has the tools and templates to measure current income and assets and to estimate future resources. The financial planner will focus on the needs of a special needs child; the college plans of the able children; and the retirement plans of the care givers. With the aid of the financial planner, the care giver can build a better budget which more accurately reflects the family=s financial circumstances. The financial planner has the expertise to introduce financial products, such as annuities, life insurance and IRA=s, to the care giver and to explain how these products can best be used to the family=s advantage.
An investment advisor is a person who recommends stocks, bonds, mutual funds and assists the care giver to make the most of what savings are available for the future. A care giver can make his or her own investment decisions, but the care giver should be completely honest with him or herself that he or she has the expertise and the time to do an adequate job. The care giver has a great deal already on his or her plate, and seeking the assistance of a competent investment advisor may be the Aright decision.@ More than with other advisors, the care giver should first seek the recommendation of his or her Acircle of support@ and then select the advisor. Don=t retain an advisor simply because he is someone=s Abrother-in-law!@
There are certain events in life which can be planned for and risks to be insured against. An insurance professional is there to provide protection against things that happen in life. This is the person the care giver should speak with about insuring the home, its contents and the automobile(s). The insurance professional=s experience will assist in setting the proper limit for liability insurance to protect against law suits. Insurance professionals are licensed by the state to sell a range of products. An insurance professional needs one type of license to sell property and casualty insurance, another one to sell life insurance and yet another to sell annuities. Remember; however, that a license tests minimum knowledge, it does not guarantee experience and expertise. While not absolute, the care giver should seek an insurance professional who have clients who have loved ones with special needs. Again, the recommendations of the members of a circle of support or intentional family group should carry significant weight.
The next installment of this Newsletter will discuss the legal aspects of a AVision for the Future.@