What You Need to Know about Selecting Professionals for Special Needs Financial and Estate Planning
For parents of dependent children with disabilities, the importance of proper financial and estate planning is far more significant than merely focusing on investment or income tax planning. Many young and adult-age children with disabilities are incapable of caring for themselves. Their future quality of life depends on their parents’ abilities and desire to structure a plan in coordination with government benefits available.
Unfortunately, very few professionals are well-versed in this highly specialized area of planning. The results of an improperly designed plan can be devastating for beneficiary children with disabilities. The best results in planning can be achieved by a team of professionals qualified and experienced in special needs planning.
While a qualified financial planner and an estate-planning attorney are the initial team members, others such as housing specialists, tax accountants, professional advocates, and social workers often make up the team as well. The following are helpful guidelines in selecting financial planners and estate planning attorneys.
In order to be a specialist, one has to be a generalist first. A comprehensive financial planner is trained and experienced in all areas of planning, including risk management; investment and retirement planning; estate planning; and income tax planning. Many financial planners focus only on certain areas of planning, such as investments and/or insurance, which may not always provide a holistic approach in planning.
Special needs planning requires knowledge of not only all areas of planning but also various disabilities, government benefits, special needs estate planning laws, and funding strategies for special needs trusts. Some financial planners have been motivated to specialize in this area due to a personal experience in dealing with a close family member or a friend. They have the compassion, patience, and dedication to work with this special population.
Financial Planning Designations
Qualified financial planners have a designation in financial planning, such as Certified Financial Planner (CFP®) and a Chartered Financial Consultant (ChFC®). The American College of Financial Services now offers a course for a Chartered Special Needs Consultant (ChSNC®). These designations also require planners to have continuing education requirements in order to stay current in their knowledge base.
Several life insurance companies—such as Met Life, Mass Mutual Life, and Northwestern Mutual Life—train interested agents in special needs planning. Financial institutions like Merrill Lynch and Morgan Stanley also have advisors that offer special needs planning. There are also financial planners who are independent and choose not to be affiliated with any insurance company or other financial institutions.
Questions to Ask
Families looking for a financial planner with specialization in special needs planning may want to ask the following questions:
- How long has the advisor worked in the special needs planning area and how many families has he/she helped? Experience is very important.
- Does the advisor occasionally work with special needs families or is his/her practice focused on special needs planning?
- Does the advisor have a designation like CFP®/ChFC® and training in special needs planning?
- Is the advisor a solo practitioner or does he/she work with a team of other advisors also knowledgeable in special needs planning?
- Is the advisor affiliated with an insurance or investment company or is he/she independent? Are advisors affiliated with that company required to sell proprietary products?
- Does the advisor use a comprehensive approach, and is he/she capable of addressing all areas of planning? Does the advisor have training and experience to be a quarterback and connect with other professionals for other planning needs?
- Is the advisor knowledgeable on government benefits, state Medicaid matters, and different disabilities, as well as with changes in the laws related to special needs planning?
A financial advisor specializing in special needs planning will be a key person in the lives of the family, assisting them through the various phases of the child’s life as well as that of the parents. When choosing a planner, look for someone with whom you can have a long-term relationship.
Special needs planning will not be complete without a special needs trust for the benefit of the child with a disability as well as other estate-planning documents for parents. A special needs trust has language that protects the eligibility of the child’s government benefits and is coordinated with financial and legal planning of the parents as well other family members, if applicable.
Choosing the right attorney is as important as choosing a qualified financial planner. The two professionals working as a team will create a win-win situation for the family. Financial planners specializing in special needs planning already have relationships with qualified and experienced attorneys working in this area. The recommended approach is to start the planning with a financial planner and complete the legal planning with a qualified lawyer.
Most qualified special needs attorneys belong to one or two of the following three professional organizations.
• Special Needs Alliance: Membership for this organization for special needs planners is by invitation only. Before being invited to join, members have already gained a reputation for being among the best-qualified lawyers in their communities. The Alliance focuses on cooperative training, problem-solving, and professional development for its members.
• The Academy of Special Needs Planners: This organization is for qualified attorneys, financial planners, and trust officers. It assists them in providing the highest quality service and advice to persons with special needs and their families. The Academy provides its members with the latest information on legal developments nationwide and a forum for exchanging best practices in providing service to persons with special needs. It also provides special needs professionals with the tools and education to improve their understanding of the unique challenges that arise during special needs planning.
• The National Academy of Elder Law Attorneys (NAELA): Attorneys practicing in the special needs area often specialize in elder laws as well due to the similarities in planning laws. NAELA is the largest national organization with special focus on special needs planning. The group holds several annual training and educational programs at the national level. Membership is voluntary and is open to all interested attorneys.
More Complex Planning
Some families may need additional legal counseling for complex estate planning involving business succession planning, advanced estate tax planning, charitable planning, and divorce planning. Not all special needs attorneys may be qualified in other areas of planning. Families in need of such planning may rely on their financial planners and work with firms with multidisciplinary practices including special needs or coordinate the services of special needs attorney with other attorneys.
The right professionals will also guide families in monitoring their plans through changes in the family situations or changes in the laws. Keeping the plans current is essential to the success of the plan.