Financial Futures

Preparing When You Have Children with Special Needs

Washington Post columnist Martha M. Hamilton was online Tuesday, March 27 at Noon ET to discuss how to plan for retirement if you're also caring for a child with special needs. Read her Sunday column here.

She was joined by Gordon F. Homes Jr., a specialist with MetLife's Division of Estate Planning for Special Kids.

The transcript follows.

To read past Financial Futures columns, click here.

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Martha M. Hamilton: Martha M. Hamilton: Hello, and welcome to today's online chat. I want to say thank you to Gordon F. Homes Jr., senior financial planner with MetLife's Division of Estate Planning for Special Kids, for agreeing to take questions on this important subject. He'll be expressing his own views, rather than MetLife's. He wanted me to say that, as with many types of advice, you should consult with a personal advisor about your own situation before taking any actions based on his answers. I also want to say an online thanks to Anne and Robert Tucillo for opening up about their family's lives and finances as a way to provide information that may be helpful to many other families. Let's go!

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Fairfax, Va.: Your article had a great list of actions for those with plenty of money. How about a list for families without assets for trusts, etc? I would guess that families with middle incomes and below are in the majority with special needs kids.

Gordon F. Homes Jr.: Setting up a special needs trust does not have to be expensive. I have worked with attorneys that will accept payments over time. Regarding assets, the special needs trust could be funded with an inexpensive life insurance option such as term insurance. Also depending on your location the Arc (a not for profit national organization) may have a pooled trust option worth considering.

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Cincinnati, Ohio: Ms. Hamilton, Please touch on some of the financial assistance that's available. Thanks

Martha M. Hamilton: Here's some information I received after the article appeared. I have heard since that there are such pools in other states.

This is a difficult area and many parents in this situation are simply unaware of where to go for help. One of the solutions you mentioned is a special needs trust. For the family in your article this may be a good though pricey solution. The fees involved in setting up and administering a sole person special needs trust can be substantial. There is an alternative. The Hampton-Newport News Community Services Board serves hundreds of similarly situated families and maintains a pooled special needs trust for parents in a similar situation. The trust has no joining fee, no administrative fees, pays no salaries or commissions and can serve residents throughout Virginia clients of the CSB or not. I am also aware of other similar pooled trusts throughout Virginia. I would be happy to provide additional information on this public service for your readers or directly to the family in the article. Please contact me if I can be helpful to you with families in a similar situation.

Best regards,

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Hampton-Newport News Community Services Board

Chuck Young

Director, Financial Services Division;

Chief of Operations, Clinical Services and Administration Division

2501 Washington Ave.

Newport News, Virginia 23607

757.245.0217x1135 fax 757.245.4918

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Martha M. Hamilton: Here's a question from a reader who could not be on today's chat: Many thanks for your article on retirement panning for those with special needs children. As the mother of a 22 year old with autism, I wonder if my husband and I will ever be able to retire. Special needs children become special needs adults and the resources available to them shrink. Combine that with taking care of aging parents and you can see a full time job navigating their everyday lives.

I was especially interested in the health insurance. Your expert, Mr. Holmes says that the family in the article can keep their health insurance for their son since his disability was identified before age 22. We are self employed and have had the same Blue Cross plan since our son was born. Blue Cross tells us, however he will age out this year. The policy is very expensive, but so can his health care (including prescriptions) be. Does this rule apply to non large group plans?

(I cannot be available during your on-line chat)

Gordon F. Homes Jr.: Varies by group plan and carrier. Options may include looking for a new group carrier, if underwriting would not be a roadblock. Otherwise, many states offer a guaranteed health option, though at increased cost. As a last resort, you may want to check with the Department of Insurance in your respective state regarding the range of options available.

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Richmond, Va.: The Commonwealth Community Trust offers another option as a nonprofit organization that administers pooled Special Needs Trusts. See their website at www.commonwealthcommunitytrust.org or call toll free at 888-241-6039.

Martha M. Hamilton: Thanks for the additional info.

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Washington, D.C.: Hi there, As the parent of a disabled child, I read your column this week with great interest. Thank you for addressing this issue that touches so many of us.

Toward the end of your article, you indicated that if a disability occurs prior the child's 22nd birthday, that child can remain on the parents' insurance for as long as the parent remains employed. I had never heard this before. Can you please identify the source of that information? Is it statutory? Again, thanks.

Gordon F. Homes Jr.: The response regarding age 22 was specific to the Tucillo's situation; however, the recommendation that readers speak with their HR department was universal. Policies vary by employer and state.

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Washington, D.C.: We have an identical twin, 18 y.o female with severe disabilities (CP, quadriplegic). She has 3 years left in the public school system in Montgomery County (then ???). She has 3 siblings, with 2 in college and one about to enter high school. We're mid 50's. Dad worked until 2 years ago, then thought I would retire. Had invested enough for 3 undergrad degrees and to pay off the mortgage. A little bit over $800,000 in retirement funds and insurance policies on both parents (term life, $2.2 million in coverage). Our wills name the 4 children as beneficiaries equally.

We have a legal guardian and set up a $179,000 whole life policy in case either of the parents dies (sole survivor coverage?). The guardian is the secondary beneficiary. My daughter is covered under the medical insurance from my former employer. I am very uneasy about her situation, and in fact have gone back to working F/T. But my daughter is now heavier than we can handle safely, and doesn't have anyone to care for her after school or in the evening. Can you give us advice on: Special needs trusts? Filing for SSI and Medicaid to cover after school care? Additional insurance to provide benefits to the guardian? Doug

Gordon F. Homes Jr.: Public benefits such as SSI and Medicaid should be pursued, also depending upon your state programs, a Medicaid waiver may be helpful. You may want to make contact with the state or local chapter of UCP (United Cerebral Palsy) for additional guidance.

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Newport News VA: The child aging out of health insurance may become eligible for Medicaid either based on the child's own income or if they become medically indigent.

Martha M. Hamilton: Thanks for passing that along.

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Burke, Va.: What is the difference between a Special Needs Trust and a Qualified Disability Trust?

Gordon F. Homes Jr.: A third party Special Needs Trust, also known as a supplemental needs trust, is set up and funded by someone other than the individual with special needs. d4a is a special needs trust funded by the individual with special needs. This type of trust has payback provisions (state Medicaid lean). The type of trust depends upon whose money and whose establishing the trust. More information would be needed to determine what type of trust is appropriate.

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Arlington, Va.: Thank you both for this informative article. Do you have any particular advice for siblings of disabled persons? My brother is 51 and mentally retarded, and my parents are in their 80s. I'm happy to take responsibility for him but am not sure where to start. How can I locate a financial adviser that specializes in planning for a disabled family member? Thank you so much!

Gordon F. Homes Jr.: One start is to go to www.metlife.com/desk. The site offers you the ability to find a MetDESK specialist, like me, in your area.

Martha M. Hamilton: You might also check with non-profits that deal with mentally retarded clients to see what information they can provide.

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Washington, D.C.: We have a 2 1/2 year old child diagnosed with spastic quad cerebral palsy as a result of a birth injury. Because he is disabled we have heard he should automatically qualify for Medicaid and SSI but we have been unable to verify this in DC and we've actually been told this is NOT the case in DC--any advice/point of clarification?

Gordon F. Homes Jr.: In most cases the parents financials are a factor in eligibility for a minor child with special needs. Like the Tucillo's, you may want to consider Medicaid waiver programs available in your area.

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Arlington, Va.: Hello- are the planning methods you would use for special needs limited to children with physical disabilities? I am asking since we have a family member who, although not diagnosed, has demonstrated inability to support themselves financially and maintain social relationships necessary to work or family. I am concerned, that without planned support when the parents are gone, this person will meet unfortunate living conditions.

Gordon F. Homes Jr.: First, I would encourage the family to seek medical guidance. Once more is known, then they family can do the proper financial planning.

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Springfield, Va.: After the parents of a handicapped child die, where does the child go to live - if the child is already 18 or above? How long does it take for the child to get into a group home? According to my parents, my brother has been on the list for group homes. Since he is not in urgent need of one (since he is living with them) he keeps getting pushed back. What happens when they die?

Gordon F. Homes Jr.: It varies by state, but in general, the death of parents/caregivers often causes one's position on the group home waiting list to be elevated for quick intervention.

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Newport News VA: People with Developmental Disabilities in Arlington is served by the Arlington Community Services Board. Contact info:

Arlington CSB, Planning District 8, Service Region II

Executive Director: Mrs Cynthia L Kemp

1725 North George Mason Drive Suite 216

Arlington,VA 22205

Main Phone: (703) 228-4843

Fax: (703) 228-5234

Martha M. Hamilton: More information from readers helping readers. Many thanks!

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Arlington, Va.: Is there any benefit to establishing a special needs trust before your child is 18? For example, are contributions to the fund, or earnings of the fund, tax deductible?

Gordon F. Homes Jr.: The reason for establishing a special needs trust prior to age 18 is to enable parents to be able to provide for their child's future in the event of their untimely death. The absence of a trust may prevent access to important benefits including Medicaid. The potential that someone else may want to gift to a child with special needs is also a consideration.

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Newport News VA: RE: Springfield

The issue is probably not placement in the group home but qualifying for the Medicaid Waiver. Virginia limits the number of waivers and maintains an urgent care waiting list. Once the situation moves the person to the top of the waiver list, a placement is usually not difficult to find.

Martha M. Hamilton: More information from another reader. Thanks.

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Triangle, Va.: what are the main points to consider when setting up trusts for special needs children?

Gordon F. Homes Jr.: Working with an expert in this area is your first step. Then, whose assets are going to fund the trust? When will the trust be funded? What needs exist that the trust will be providing for, and are these present or future needs? A review of trustee options i.e. family members, pooled trusts, or institutional trustees. How will the trust be funded? These are all some of the first questions to ask yourself and the experts you work with.

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Boise, Idaho: We do not have insurance. Should non-Roth IRAs go into family trust, revocable living trust, testamentary trust along with house, etc. now or separate trust and then at our deaths (Dad-73, Mom 68) be put into SNT? How are IRA distributions determined from SNT? Taxed at trust rate? Special child has Medicare coverage based on own work record and no assets. Brother would be guardian and executor. When SNT is dissolved remaining money goes to 3 older siblings. Thank you

Gordon F. Homes Jr.: The IRA cannot be assigned to the special needs trust. The key issue is the beneficiary designations on the Roth. The portion to go to the benefit of child with special needs should be directed to the SNT. It is possible that the IRA could then be stretched over the life expectancy of the SNT beneficiary. To get a more complete answer, I highly recommend seeking advice from a tax professional.

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Springfield, Va.: I am one of three siblings of an adult mentally retarded male. Our ages range between 40 and 50 years of age (including our handicapped brother). My parents do not know where to begin in planning for his future and neither do we. What books would you recommend for siblings of a handicapped to read in terms of planning for the future (financial, emotional etc.)? What websites should be sought?

Gordon F. Homes Jr.: There is a book "Special Needs Planning Guide" due to be published in the next 60 days by Brooks publishing. You may want to consider this as well as Web sites including www.metlife.com/desk or www.thearc.org as a starting point.

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Newport News VA: For the sibling in Springfield,

Mental Retardation Case Management Services and planning advice may also be available from the Fairfax Falls Church Community Services Board. I would contact the Director of Mental Retardation Services.

Fairfax-Falls Church CSB

Planning District 8

Service Region II

Executive Director: Mr James A Thur

12011 Government Center PKWY Suite 836

Fairfax,VA 22035-1105

Main Phone: (703) 324-7000

Fax: (703) 324-3225

Martha M. Hamilton: newport news has been a great source of virginia information for us today. many thanks.

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Martha M. Hamilton: Lots of tough questions about providing for children and brothers and sisters with special needs. We were fortunate today to be able to take advantage of Gordon Homes' expertise in this area. Remember, if you want to pass on an idea for a column, you can always e-mail me at hamiltonm@washpost.com. Thanks, Gordon!

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