Financial Planning for Families with Disabled Members

1
Financial Planning for Families with Disabled
Members

• An estimated 54 million Americans are physically
  or mentally disabled over half are seriously
  disabled

2
Where to Begin?

• Talk to physicians educational specialists to
  try to estimate long-term costs
• Learn as much as possible about the specific
  disability read, internet, talk
• speak to other parents /or care givers about
  chores, after school/summer recreation, etc.
• Involve entire family in planning time money
  issues (including fun filled activities) with
  other family members, etc. for parents to have
  time a lone together

3
Annual Financial Check-Up

• Review current assets
• Think about assets available and assets to be
  used during parents or c/gs lifetime
• Provide for death/disability of parents or c/g
• Social Security (more later)
• Supplemental Security Income (more later)
• Up-to-date Will
• Maybe, set up an appropriate trust within or
  outside the will

4
Questions for Families with Disabled Children or
Other Members

• What can the child/member be expected to earn
  over his/her lifetime (realistically)?
• What governmental programs are available and
  applicable over the life of the child/member?
• What contingency plans are necessary in case the
  primary wage earner is unable to support the
  disabled person or family due to death AND/OR
  disability?
• Who will take care of the minor (young) child in
  case the parents or primary c/g cannot?
• Who will take care of the adult (if necessary)
  after parents or primary c/g are unable to do so?

5
Flexible Financial Vehicles

• The number one tool is life insurance, followed
  by disability insurance and insurance trusts
• These are the surest, most direct ways to support
  the disabled child or adult who will need some
  form of lifetime assistance

6
Social Security (SS) Supplemental Security
Income (SSI)

• SS - Direct payment from the government
• commencing upon death of the parents
• covered by Social Security earnings
• SSI - Should not be confused with SS
• - Federal income program for the
  blind,
• aged and disabled with no other
  sources
• - Payments (often supplemented by
  state)
• made to the disabled, regardless of
  age

7
Disability Defined for SS SSI

• A condition which prevents individual from doing
  gainful work (expected to last 12 months or
  longer or is expected to terminate in death
• Social Security office determines disabilities
  and financial need and will explain LD childs
  and other disabled persons rights under SS SSI
  programs

8
Supervision Alternatives

• When Childs disability is mild he or she may
  be able to and can exercise his or her legal
  rights as an adult
• In other cases, may not need a guardian a formal
  designation, but may need an advocate which is an
  informal arrangement to assist people unable to
  manage their own affairs
• Guardianship formal and a legal arrangement
  accomplished through the courts

9
Two Types of Guardianship

• Personal a guardianship for the person (child
  when under 18 and/or adult when 18 or over)
• Property of the ward exercise control over
  assets owned by the ward
• Guardianship is a relatively inflexible legal
  device may require court approval for
  expenditures, an annual accounting, legal costs
• Guardianship property may count against
  eligibility for government assistance based on
  need

10
Trusts

• Far more flexible and effective than property
  guardianship
• Can be used to provide a multitude of provisions
  to meet the desires and needs of the family
• Can have more than one beneficiary to meet other
  family member needs
• Shield assets from eligibility issues associated
  with government needs based assistance
• Key is the get good legal advice and to select
  the best trustee trustee can be a bank, or an
  individual

11
Flexibility of Trusts

• In case conditions and/or needs change
• Trustee and/or beneficiaries may be given
  power to change terms of the trust if
• Law changes
• Family circumstances change
• Move the trust to another state with more
  favorable laws
• Can even terminate the trust entirely with proper
  language in the trust document

12
Eligibility for SSI

• Aged 65 or older
• Blind (20/200 or less, etc.) or Disabled
• Those with limited income resources
• US citizen or national or an alien in certain
  categories
• Resident in 50 states, District of Columbia or
  Northern Mariana Islands
• Not absent from country for full calendar month
  or more than 30 consecutive days
• Must agree to apply for all other cash and/or in
  kind services he or she is entitled

13
Definition of Disabled

• For a Child medically determined physical or
  mental impairment, which
• Results in marked and severe functional
  limitations
• Can be expected to result in death
• Has lasted or can be expected to last for 12 or
  more months
• For an Adult - medically determined physical or
  mental impairment, which
• Causes inability to engage in any substantial
  gainful activity
• Can be expected to result in death
• Has lasted or can be expected to last for 12 or
  more months

14
Limitations on Income for SSI

• Money earned from Work
• Money received from other sources such as SS,
  workers comp., unemployment benefits, veterans
  benefits, friends relatives
• Free food shelter like being in prison
• Resources are considered items that can be
  converted to cash such as stocks, bonds, land,
  vehicles, personal property life insurance
• limited to 2000/3000 individual/couple

15
Where One Lives Matters for SSI

• Whether rent or own person can receive maximum
  SSI amount payable in his or her state
• Same if person lives in someone elses household
  - as long as person pays for food and shelter
  partial amounts reduce SSI benefits up to 1/3
  of federal SSI benefit rate
• No reduction if spouse provides food shelter or
  if person is a minor child and parent provides
  food shelter - as long as living with each
  other
• Generally no SSI reduction when given items of
  small value such as kitchen appliance, clothing,
  etc.

16
SS and SSI

• Many eligible to receive SSI benefits are also
  eligible to receive SS benefits
• Application for SSI benefits is an automatic
  application for SS benefits, but may need
  additional information from the disabled person
  for SS benefits
• Person should be 62 or older, disabled or blind
  and have enough work credits

17
Necessary Work Credits for SS

• SS Disability Benefits based on age and number of
  work credits
• In general, need a minimum of six work credits -
  also need to average about one additional work
  credit for each year between 21 and 62 years of
  age up to a maximum of 40 credits.
• Under 24 six work credits
• Age 24 to 31 usually qualify if worked ½ the
  time between 21 and age at disability
• Age 31 to 42 need 20 work credits
• Over 42 goes up gradually until age 62 when
  disabled person needs 40 work credits to be
  qualified

18
SSI Other Government Programs

• Medicaid in many states SSI beneficiaries are
  eligible for Medicaid often same application
  serves both purposes
• other states must apply separately
• Food Stamps Again, in most states food stamp
  benefits are available to those otherwise
  qualified receiving SSI benefits info can be
  gained from local SS Offices except in California

19
SSI Other Government Programs

• Affordable Health Insurance for Children
• Through state Medicaid programs which provide
  free health coverage to most low-income children
• Temporary Assistance for Needy Families
• TANF program provides state cash block grants
• SSI benefits to TANF families limited to members
  that are blind or disabled adults or children or
  those over age 65