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It takes a team to make your financial plan successful

Before I worked as a financial planner, I was the executive director of L’Arche Chicago, the small local chapter of an international network of supportive living communities for adults with intellectual and developmental disabilities. Like almost every non-profit in America, we had an annual gala. Pulling off the gala required a distinct, temporary board committee. One person who always got started ahead of time took care of the invitations. One person, who had the free time to travel around the city and check out options, arranged the venue. One who was creative made the flower arrangements for each table and the general decorations. One who was a foodie managed the caterer and arranged for the cash bar. And one, a person with endless amounts of patience, organized and oversaw the dreaded silent auction. Each committee member had a particular area of expertise and a particular task to do, but the tasks were interdependent, and all the committee members had to coordinate to make the gala succeed.

In an analogous way, my clients need a circle of professionals to help them complete the interdependent tasks that must be coordinated to make their financial plan succeed. These professionals are key players on the team that I build to help our clients succeed.

  • The Estate Planning attorney. Typically, my clients need or want to prepare an inheritance to provide additional support to their family member with a disability after they die. In many cases, that family member may need also to rely on means-tested benefits such as Supplemental Security Income (SSI) and Medicaid, especially the latter, which funds many long-term care services for adults with disabilities. Because both SSI and Medicaid have strict income and asset limitations among their eligibility criteria, for many of my clients, it is imperative that they leave assets and income streams not directly to their family member with a disability, but to a supplemental (or special) needs trust for the benefit of that individual. I’ve lost count of the number of clients who come to me thinking that I can “open” a trust for them. After I have explained that a supplemental needs trust is not an account, but a distinct ownership structure created and maintained by very specific legal documents, I provide them referrals to several attorneys who also specialize in disability. The attorney and I then work closely together to make sure that the necessary wills, trust(s) and powers of attorney are executed AND that assets are correctly retitled, and beneficiaries corrected so that the assets be available to the family member with a disability in a way that will not yank the foundational rug of government benefits out from underneath that person.

  • The Insurance Professional. For many financial planning clients, three of the greatest risks to a plan’s success are premature death for those clients who are married or have families and premature disability and/or extended long-term care needs for any client regardless of family or marital status. Clients who have well-paying jobs need to appreciate the limits of their employer group disability and know what private coverage they will need so maintain their lifestyle in the case of premature disability. Clients who have minor children or adult children with disabilities need to be clear on what they would to replace the lost income if an income-earning parent were to die prematurely or to hire a paid caregiver if a stay-at-home parent were to die. Clients in all situations need to understand how an extended long-term care need could quickly erode assets needed to care for a spouse or dependent. These risks are amplified for my clients, who have to maintain and apportion financial resources to cover not only their own timeline, but that of their family member with a disability who is, generally, a whole generation younger and unable to earn enough to be fully self-supporting. As a fee-only financial planner, I help my clients create a risk management strategy, but I rely on trusted insurance brokers to help them to implement those strategies.

  • The Tax professional. As financial planners, we are aware that how much our clients earn, save and invest are key variables that can drive or undermine their future financial independence. Equally important, though, is how much they can keep, legally, out of the hands of the IRS, their state department of revenue and any other applicable taxing authority. Some financial planners are also CPAs. Personally, I have enough tax expertise to give good advice, but I rely on dedicated tax professionals to guide my clients through the complexities of minimizing their taxes in a landscape of ever-changing regulations. If a client has a large amount of equity compensation, is a small business owner or has a lot of real estate or other income producing property, I want them to work with a tax professional that clearly understands the nuances of the tax code with regard to those situations. And I want the tax professional to feel comfortable sharing information and working with me so that between the two of us, we can help the client maximize both the income that s/he receives and the income that s/he gets to keep. Here are two examples. Many of my clients have an adult child with a disability living with them. Per the “qualifying child” rules, a “child” may be one of any age who has a “permanent and total disability.” However, claiming one’s adult child as a tax dependent my complicate her/his eligibility for certain means-tested benefits. In order to receive the maximum SSI payable, an adult child with a disability who lives with her/his parents must make a regular financial contribution to live there. But that muddies the question of whether or not the “child” can truly qualify as a dependent and introduces the question of whether the financial contribution is somehow income to the parents. I need to maintain open communication with my clients’ tax professionals to work these things out on a case-by-case basis.

Planning a large, fancy event such as a wedding or a gala requires a dedicated and coordinated team if the event is to succeed. Even more does planning for your whole financial future and that of your children require a coordinated team of dedicated professionals.

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