Special Needs Trust

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IRAs, long-term care, life insurance, investments, and taxes. Now let's get started with Finishing Well. So welcome to Finishing Well with Certified Financial Planners today, Tom Griffith and Han Shyle, our, you know, longtime favorite.

Both guys, so excited to have this show. This show is near and dear to my heart. I can tell you, as that you may know, if you know me well, that I have for 25 years taught special needs at Calvary Baptist in Winston-Salem. And so I teach special needs adults. And so today's show is called The Special Needs Trust. And at the beginning of that, you might think, well, I don't know anybody in special needs.

You know, this show wouldn't be for me, which is exactly what I thought, okay? You know, my wife, I got an opportunity about 25 years ago to teach the largest Sunday school class at Calvary Baptist, which at the time had, you know, nearly, you know, 65 members in it, which was, you know, as big as some churches. And so it was just, wow, what an opportunity. And so I came home and announced to my wife, Tammy, great news.

We are now the Sunday school teachers for the Ham Sunday school class at Calvary. And she was like, no, we're not. And I said, what do you mean?

No, we're not. She goes, no, we're going to teach special needs. And I was like, what? I, you know, we don't have any special needs, you know, and I was picturing actually children, but she was talking about adults.

I just couldn't get this. And she said, well, God told me this was going to, I went Wednesday night, heard these people speak about special needs. And I found out this was going to be our ministry.

And so this is what we are going to do. So I was like, what? And so I had a men's group, or I still have the same men's group, a Christian Businessmen's Committee that meets. And I went to that men's group that morning. And one of my best friends there, who happened to be an old missionary by the name of Archie Jones, he said to me, Robbie, you know that in Matthew, it repeats that the King will reply to you, truly I tell you, whatever you did for one of the least of these, my brothers and sisters, you did for me.

And he looked at me like, and I was like, you dog. Well, let me tell you that 25 years later, that was one of the best things. My wife heard from God that it was clear. And what my friend told me, it was clear.

And oh, what a blessing it has been. And so as you listen to this show, which is going to be really, really helpful to providing for these people, you know, the special needs group in general, which as Hans will point out, they all have names. And I can tell you lots of them, Adam and Ryan, and all these wonderful, wonderful friends of mine, okay?

But I'll bet you know these people in your life. And this show is critical to understanding some long-term planning financially for these folks as, you know, obviously their parents aren't going to live forever, and then how is it going to work? And so this show, whether you're high income, low income, middle income, this is for everybody. And so as you listen to this and try to understand it, I would emphasize from a personal level that you would be surprised at the people that you will come in contact with you and you go, oh, let me tell you about this show I heard on Finishing Well. And so with that, Hans, I'll turn it over to you guys and Tom and take it away. Well, Tom and I decided to, when we were really working with the second case study or people coming into our circle, the second time this came up was somebody that was already putting their money with us for retirement and doing a number of things with us as we just realized how short we were in really knowing about special needs trusts and the needs of families and the estate planning needs of families where they have one of these children who is now in their 20s or 30s or 40s and the parents are in the 60s and 70s where they haven't really needed much help of a financial professional like us until now because they're approaching retirement and they've been just taking care of this child well beyond 18 or 22 and the child that is not is not special needs is going to leave the nest and they just they're kind of like there and the parents are providing for what this child needs and usually not complaining about it much this is in some ways this is a real gift to have this child that or adult child now that just kind of hangs out with mom and dad for life and there's blessings in this but then the biggest worry these people have and we we get this out of them very early is just their only concern is for what's going to happen to this child or this adult that was once a child when we're gone and we can't provide all these extra things what's going to happen and that that's kind of like one of the most important things of estate planning because your kids that are you've just gone on and they have a family of their own they're going to get some kind of inheritance or something or not or it's just not something that you have to do for them but this child who's now an adult if they pass away suddenly or they have an extended illness i mean who's going to take care of them when the parents are gone this is the big worry and so we just decided we were going to learn everything we could learn and we're still not holding ourselves out as experts in this but if in the in the financial community that of the world of cfps i think we have a special talent within this that we've developed that we can certainly get people to everybody that they need to get to right because there's a whole team that it's not just a one-person show when it comes to providing for all this and and it's critical right that they protect their the money that they're getting from the government in each case or usually in most cases that's what exactly how they're being provided for on some cases right well a lot of these folks most of them that we've run into they're already on ssi i mean so they're getting a check somewhere between a thousand bucks a month and two thousand bucks a month that comes in that is for their support and well-being from the government and then most of them are on medicaid and then the medicaid can be fairly limiting like you have these children with autism or they're now adults and the parents just pay out of pocket many times for the specialized psychologists that they want to send them to or uh for specialized doctors or those types of things and then they're going to rely on medicaid for the rest of their treatment and then a lot of the folks that we're dealing with is they're more planning for the future they're saying okay so when we can't take care of him or her what's going to happen okay where are they going to get all these things that we do for them we take them on trips we take them drive them around to places take them to amusements take them to visit their brothers and sisters take a whole family vacation where they go to there we take them to doctor's appointments take them to educational programs and then just generally provide the house that they live in here and all their functioning we're just worried when both of us are gone or incapacitated what's going to happen and that's where we come in about setting up a special needs trust and we're certainly not attorneys but you know i can think of the few of the case studies that we're talking about here we actually brought them to the attorney okay we vetted the attorney and then sent them or sent them a choice of attorneys they met with them and then you know and we've actually learned a lot from those attorneys as well right and so tom how would you know jump in on this yeah i mean i think one thing that's really important to think about is what is the purpose of a special needs trust and so i think a lot of people listening might not even know what a trust is in general so a trust is a legal document it's its own entity legally that can control money once the the granter of the money so whoever had the money originally gives it to the trust or leaves it to the trust and they can tell in in legal language like what the trust is allowed to do and so a trust is a way to control the money after you have passed away is i just had to simplify that and so what a special needs trust is it's a special type of trust that really is set up in a way to protect your child who has this disability from losing their state benefits losing medicaid losing ssi some of these case studies these people are very wealthy and they have access to these programs not because of their money but because their child is on is on medicaid and so even people who have a lot of money this is still very important planning to do because there are programs available that are only available if they keep these state programs which generally are going to help provide for the care of their child so the the special needs trust is set up in a way to protect their benefits from them losing benefits after the parents have passed well yeah and so we talk about people with a lot of money i mean solving their problems that money can solve is easy with people that have a lot of money you just put a certain amount of money in the special needs trust and we can get into the right kind of trust and all the kind of thing and who the trustee is going to be this gets a little trickier with people that don't have a lot of money they've got some money but they don't have a lot of money and they have an income and then they very much need this ssi check that they get every month for their adult child that's living with them and then they're just concerned what happens when i die and i die and my social security stuff check stops and what's going to happen to this child and so here's where a small amount of money or if you call a hundred thousand dollars small relative to some of these large trusts it is small but if if a person has a lot of these middle-class folks are going to dedicate a big portion of their estate to this purpose and if they don't have a hundred thousand dollars to put toward this there's such a thing as life insurance and so we can set up even a 25 or a 50,000 policy that's going to fund one of these things immediately upon their death and so we can set that up with a monthly payment where they can start using part of their social security check so there's a multiplier effect with life insurance regardless when we meet somebody who is looking after a 40 year old child of theirs who needs constant care and they're 65 and they don't have a lot of money to throw around but their biggest worry is what happens if i need care i pass away and then what's going to happen to the child and i just setting up one of these special needs trust and then funding it gives them access to extra money to provide all those things mom and dad did yeah we got examples and more that goes into the process who's all on that team and again we want to remind you as always that this show is brought to you by cardinal guide cardinalguide.com and so if you go to cardinal guide you're going to see there's a seven worries tab and one of those worries is estate planning and so this show is all about the state planning and the special needs trust and you're going to find that tom and uh hans did a beautiful amazing video with some of the most extensive show notes i have ever seen like what the heck i mean to say they've done their homework on this one would be but i again i i think their hearts are clear that that this is near and dear to what a cool thing to be able to set up these situations for the least of these as the case may be again we got all that at cardinalguide.com as well as how to get up with hans and tom it's all there at cardinalguide.com we'll be right back with much more on special needs trust investment advisory services offered through brookstone capital management llc abbreviated bcm a registered investment advisor bcm and cardinal advisors are independent of each other insurance products and services are not offered through bcm but are offered and sold through individually licensed and appointed agents cardinal advisors is not affiliated with or endorsed by the social security administration or any other government agency welcome back to finishing well with certified financial planners uh han shile and tom griffith and today we're talking about a special needs trust and so cool i'm so excited about the second part of this show tom you know kind of explain you know what happens within this now this special needs trust what all's going on with that yeah so let's we're fast forward the special needs trust has been set up it's been funded it's now paying out so what can it do so one of the main sort of critical things to know about just special needs planning in general is the whole goal is we don't want income coming to the child with a disability or the adult child with a disability because it's the income that causes the problem that's what causes them to lose benefits state benefits and so we want these payments to go directly to the providers and not through the the child and so here are some things that the trust could pay for i'll just sort of lift them off pretty quickly can pay for cable tv internet a housekeeper an attorney accountant investment advisor care manager a caregiver hairstylist medical equipment hobbies vacation tickets pets clubs cars transportation so it can pay for a lot of things two things that are very critical that it cannot pay for and this is where you'd want to work with uh someone who knows this type of planning it cannot pay for shelter and they not cannot pay for food so if you have questions about that call us we can talk about that but those are some of the things that the trust can help provide for and that's the reason why we've set this trust up wow and so that once we have this trust set up and and what you talked about was that the people within it and one of the critical aspects of all that um is the team itself right hans well it is and so there's a quite a list of people some of them serving in multiple roles but you're going to need an attorney to set the whole thing up that is an expert at this and we can help you find that person we've done that for several people and they're going to need to be in that state where they live then you need an accountant who is familiar with tax regulations with all of this is you can need somebody from with just like the attorney that does done a few of these tax returns before for for special needs trust you're going to need an investment and tax advisor and many times that's us you're going to need a life insurance agent it's a great funding vehicle for these things and then later you're going to need a trustee when that's all to set it up but later you're going to need somebody that's going to serve as the gatekeeper for deciding how the money's invested and how it's paid out and how it's going to last for the life of the child you're going to need a legal guardian of the child and because the parents serve in that role well they're alive and after their death you're going to need somebody who is the legal guardian of the child and then ultimately caregivers and all those things that Tom mentioned in that list of people so there's quite a team going to be looking after the interests of this child I think one important thing just to and that team aspect is a lot of people we come across they might have set up or they went to an attorney they had a special needs trust set up which was a good step but they really haven't thought through how this is going to play out once they're gone they haven't set that team up already I mean you really want to have those people in place ready to perform those actions before you're gone because after you're gone you have no say of what happens at that point so this is work that needs to be done while the parents are still alive while they still have their wits about them that they can get the team in place ready to go when eventually they pass and their child is needing to be cared for after they're gone yeah and I mean the natural people to take care and look after the well-being are the siblings okay they're and a lot of these adult needs special needs adults they they don't live as long as their brothers and sisters I mean just typically there's a lot of reasons for that many times they don't exercise a lot and they will tend to have diets that aren't as good for you know what lasting a long time but regardless the siblings you know are the good candidates but then you get into family dynamics and you might have some families where the siblings aren't the best people to look after the needs of their and to a certain extent their competitors for the estate I mean they're just if everything's thrown at this child which I don't recommend is throwing all the money at the special needs trust to the exclusion of the other children of their inheritance that's not good either creates resentment and so but so the siblings are for many of these roles a good place to start you can also think about cousins you can think about grandchildren of you know of your of your children because by the time this comes into play your grandchildren may be adults themselves and they may be better suited to look after their uncle or aunt I mean and then they're just like Tom and me Tom's 31 I'm 65 so you know when we're putting ourselves forward as somebody to help you in the future Tom's a more likely candidate than me it's the same thing with your siblings but you really need to plan this out now I mean just while you're in your 60s when you're coming to us about retirement planning and we're looking at all these things we need to prepare for the end of your life and the living on of your child is dependent on you now and what Tom was getting at is we need to talk about what money we're going to leave to the kid or to the adult child into the special needs trust and we don't want to leave IRA money if we if there's any way possible to avoid that if it's the only thing we got it's better than not having money but the taxes get real complicated on receiving that where it's put in a trust I mean I'm just going to kind of leave it at that so more preferable would be Roth IRA money is that where you've already paid the tax or just regular money money or life insurance proceeds are another great source of money and if you can't qualify for life insurance putting an annuity in there for funding so there's a lot of things we're not going to get into detail about that but you need to think about what money is going to go to that this trust when you pass away or when you're incapacitated if you're the parent in this situation yeah and and I again want to reiterate that you know you may not have somebody like this in your life but you know people and what a blessing to have a team you know where many plant counselors plan succeed and and to have a team like Hans Tom or wherever you go to go okay let's figure out you know what what is this going to look like like you like Hans pointed out so clearly you know you got to have a guardian you got to have you know these different people on the team but what you know can I just imagine you know how good it would feel to know okay we see how this is going to be funded we see how the people are in place and and and that God is gonna you know provide for my child after I'm gone or provide for my friend's child is it again I thought you know prayer is clearly a big part of you know how is God gonna do that well you know get him involved maybe why you're listening to this show by the way is God is trying to get you involved in this trying to get you to plan because you know Hans is the ultimate goad we've talked about every man year you know like we need to not just put this off this is something needs to be done right Hans yeah so let's think about a couple of things before we run out of time here number one is the parents themselves or the single parent needs to think about their own long-term care it's going to be a really bad situation when they go down or they have a stroke or they have something and now they're needing home health care and at the same time they've been the caregiver to their adult child so we need maybe not only think about death think about incapacity think about when I the parent and the caregiver if I need long-term care first of all that's going to have an expense and then what's also going to have an expense is the caring for what I've been doing for my adult child so that's something to think about you also want to think about the third party special needs trust as opposed to a first party where the money that's left in there when the special needs child passes away that how it can be left I don't want to get into details about that but that's a consideration and then you know we just overall want to think about the able account so you know you could just google that to learn a little bit about a BLE and those acronym stands for something in particular I don't know that I can spit that out to you right now but it's a it's a way to avoid a special needs trust where you could just fund into a you could put in a fund that's all put together with other monies within a state that creates something like a special needs trust so I just want to acknowledge that it there's many pitfalls with those as well and they don't they're not suitable to leave something like a hundred thousand dollars to all in one block but there's certainly an alternative that you ought to learn a little bit about if this is of interest to you one thing else I'm missing yeah one other thing that is important to have that is separate from the special needs trust is a life care plan so this is where you sort of laid out the intention of what you want to have happen with your child so the trust is the legal entity that controls the money that controls them protects them from losing benefits the life care plan really gives you more sort of not the financial aspect but like sort of the soft benefits Wow again unfortunately we ran out of time before we ran out of show so we want to remind you if you go to Cardinal guide comm and go to the estates tab and the no at the worries you know seven worries of the estate tab is is where you're gonna find this special needs video that Tom and Hans did and how awesome is that all those resources there at Cardinal guide comm as well as obviously how you can contact either Hans or Tom and again you can tell that this these would be wonderful folks to have on your team to help plan this for your special needs friend for your special needs child it's all there at Cardinal guide comm thanks so much guys great show thank you the opinions expressed by Han Shile and guests on this show or their own and do not reflect the opinions of this radio station all statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such any statements or opinions are subject to change without notice investments involve risk and unless otherwise stated or not guaranteed past performance cannot be used as an indicator to determine future result any strategies mentioned may not be suitable for everyone information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you before acting on any information mentioned please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation finishing whale is designed to provide accurate and authoritative information with regard to the subject covered investment advisory services offered through Brookstone Capital Management LLC abbreviated BCM a registered investment advisor BCM and Cardinal advisors are independent of each other insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents Cardinal advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency we hope you enjoyed finishing well brought to you by Cardinal guide comm visit Cardinal guide comm for free downloads of this show or previous shows on topics such as Social Security Medicare IRAs long term care life insurance investments and taxes as well as Hans best-selling book the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows or to get Hans book go to Cardinal guide comm if you have a question comment or suggestion for future shows click on the finishing well radio show on the website and send us a word once again that's Cardinal guide calm Cardinal guide calm this is the truth network