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Develop a Special Needs Plan That Can Weather Storms

Two days ago, I looked out my windows on snow and at a thermometer reading of 28°F. Less than two weeks ago, it was so summer-like hot, my son was going shirtless and begging to run under the sprinklers. If an outer-space alien contacted me about landing in metropolitan Chicago in the springtime and asked about the weather, the best answer I could give him or her would be “it depends.” With any luck, the extra-terrestrial would have access to a Star Trek-like replicator and could create appropriate clothing daily and on the spot. Or, s/he might have a personal climate control suit on the order of the “stillsuits” worn by inhabitants of the planet Arrakis (The Dune novels). “It depends,” is also an answer I have to give far too often, when prospective clients ask me general planning questions, particularly for disability related situations since the variation among clients is far more even than the weather variations throughout Chicago spring.

For example: should I claim my adult child with a disability on my tax return? It depends:

  • Did your adult child live with you for at least one-half the year or was s/he away only for post-secondary school?

  • Does your child work? Will s/he benefit more by self-claiming and perhaps claiming the earned income credit?

  • Not counting SSI, which is non-taxable government support, how much is your adult child contributing to her/his own support?

  • Does your child have Medicaid through an enrollment type that considers the income of the entire tax of the household?

  • Particularly to this current season, do you want your adult child to get an economic stimulus payment?

Should I, as person with disability, or my adult child with a disability contribute to an employer-sponsored retirement plan or save in an ABLE account instead? It depends:

  • Does the person need to access or expect to need to access in future means-tested benefits such as Supplemental Security Income (SSI), Medicaid, or Medicaid waiver-funded services?

  • Does the person expect to need the funds prior to age 59 and a half?

  • Does the person intend to stay with this employer?

  • Does the employer offer a match?

  • Will the employer consider contributing to an ABLE account, or only to the company’s retirement plan?

Should we use a special needs trust or an ABLE account to save for our adult child with a disability? It depends:

  • How much in assets are you trying to hold in the vehicle?

  • Will the vehicle be funded now or in the future?

  • Will the funds be required in the short term or the long term?

  • What is the source of the funds?

Should we charge our adult child with a disability to live with us? And if so, how much and what should we call this living expense? It depends:

  • Does your adult child need to access or expect to need to access in future means tested benefits such as Supplemental Security Income (SSI), Medicaid, or Medicaid waiver-funded services?

  • Would a “fair share” or “flat rate” calculation work more to your favor?

  • What else does the person need to spend money on?

Should we keep our adult child with a disability at home as long as we can, or should we help her/him to transition earlier to a supported-living situation outside our home? It depends.

  • How much support does your adult child need?

  • Is her/his life outside the home well developed and is it location-dependent?

  • Does your adult child want to continue to live in your home?

  • Does s/he have friends or a life-partner that s/he wants to live with?

  • Are there supported living situations you have seen that appeal to both you and your adult child?

Should we accept an agency-run group home or other supported living situation, or should we try to create our own? It depends:

  • Do you have an agency with a philosophy and organizational culture that you admire or respect?

  • Does that agency have an opening, or will they have one within the time frame that you will need it?

  • Is your adult child likely to qualify for the sort of public funding that the agency will need to accept her/him, or do you have the wherewithal to private pay for as long as it takes to get the funding?

  • Do you have other families that could work together with you on a family-designed supported living project?

  • Do you have a structure in mind that could keep the project running, but that is also flexible enough to adapt if the situation or participants change?

  • How much would a family-designed project cost to set up and maintain, and where would the funds come from?

  • Do you have a pipeline to find, train, and manage the support workers and other professionals you will need?

  • Do you have a plan to keep a family-designed project running, when you can no longer do the work?

Should we rely on investment assets or life insurance to set aside future supplemental funds for our adult child with a disability? It depends?

  • Of what age and how healthy are you and the child’s other parent?

  • When will your adult child need the supplemental funds?

  • What assets do you have and what other uses for them will you have in the future?

  • How susceptible is your special needs plan to market risk?

Should we move our money into cash or different investments if the market is very volatile? That depends too:

  • How long is your time horizon? Are you five years away from retirement or twenty-five years away?

  • Is your portfolio actually balanced? Are you overweight or underweight in a particular asset class?

  • Do you have a strategy for reinvesting the cash when the market stabilizes?

  • Have you created a financial plan that can succeed despite market volatility and downturns?

Science fiction is full of creative ways for human beings (and other life forms) to micromanage not only their physical environment, but sometimes also (via a plot-twisting time warp) micromanage their past and present. Some 20/20 hindsight could have been useful just before the market began to tank in early-2008 and just before it turned to recover in March of 2009. It would have been similarly useful to predict the extent to which the market would drop due to COVID-19-related factors, and I’d love to jump in H.G. Wells’ time machine to scout out the best time for clients to pile into new investments once the COVID-19 shutdowns are eased. In the real world, though, we have to take the long way around, using our best assumptions to calculate future needs and then saving and investing in ways that allow our retirement and special needs planning to succeed despite market downturns and unexpected expenses. If you are ready to build this kind of plan, I am here to help.

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