Talk Is Cheap and Ensures the Best Financial Strategy for Your Family

Talk Is Cheap and Ensures the Best Financial Strategy for Your Family

Communication is Essential
To ensure the best possible outcome when planning the financial future of your loved ones, strive for open and honest conversations with family members and the professionals whose guidance you seek. Be sure everyone on your strategy team—your financial services professional, your attorney, and others— has all the facts. Without such communication, mistakes are likely to occur in your financial strategy. As time passes, situations change, so keep the conversations going.
Put These Strategy Tools Up for Discussion
When developing a strategy to ensure the overall well-being of a person with special needs, certain tools (such as those described below)may be used. Ensure that everyone knows the strategy, how it works, and the role he or she plays.
Wills, Policies, and Investments with Named Beneficiaries
Many parents with wills bequeath their assets "to all my children equally." It may seem the easiest and fairest option, but if one of the children has special needs, that directive could hand down trouble. Having personal assets in excess of $2,0001 will disqualify a person for Supplemental Security Income (SSI) benefits. A child receiving more than that amount must spend down the inheritance before reapplying for SSI. It's a time-consuming process during which the person may have no income.
Having no will or strategy may also present problems. State laws would then define the distribution of assets, with a portion going to the surviving spouse and the balance to children, or divided equally among children if there's no surviving spouse. Again, SSI benefits could be jeopardized.
The same problem can arise if a person with special needs is a named beneficiary of a life insurance policy, a pension or personal retirement plan, and some other investments, so make appropriate changes to your named beneficiaries, if need be. Directing proceeds into a special needs trust (SNT) is a common solution. The trust is established for the benefit of a person with special needs. Even a person who lives in a group home, works in a supported environment, and earns $35,000 a year can benefit from a special needs trust. The trust funds may be used for anything other than food or rent. Directing money that's gifted or bequeathed into the SNT protects it from misuse by individuals who might come into your loved one's life and not have best interests at heart.
Actions of others could affect your strategy, so take time for a family meeting where, together, you can list potentially helpful friends and extended family members. Then caution them about the ramifications of naming a person with special needs as a beneficiary. You might consider drafting a simple letter explaining these issues and send it to a list of people you've identified who might be inclined to bestow gifts on your child.
Advanced Medical Directives, Powers of Attorney, and Guardianships
Open communication is vital when discussing the need for legal documents such as an advanced medical directive, a limited medical power of attorney, a limited financial power of attorney, and a durable power of attorney. Financial services professionals and attorneys who focus on helping people with special needs can explain the purpose of each document. Generally speaking, a person is named to manage, or help manage, the medical, legal, or financial care for a person with special needs. Each document is precisely written and bound by state law, so out-of-state moves may require rewriting or amending the document.
To carry out these directives, choose individuals with the maturity, temperament, patience, and willingness to be an advocate for your loved one, and who are willing to be involved in the community of people with special needs. Involve the individuals you're considering in discussions with the family and with your financial services professional and attorney. They'll understand their responsibilities, and you'll know if you're making the right choice.
Letters of Intent
A letter of intent, sometimes called a life care plan, is a document that provides detailed information about your family member to give to a future caregiver. Favorite foods, best friends,likes and dislikes, behavioral habits, as well as medical and financial information can be included. The more detailed, the more value it will have for the caregiver. It isn't legally binding, but those who settle your estate will review it along with your will and other legal documents to ensure your wishes are carried out.
Keep the Talk Going
Regularly scheduled family meetings will help you all stay aware of each other's needs. Who's feeling overburdened? Who's feeling overlooked? Who may no longer be able to take on future family obligations as planned?Time begets change, so keep communicating. Laws, the development of a child with special needs, dreams and goals of all family members, even the family itself will change over time, so your financial strategy should be reviewed at least annually.
1Understanding Supplemental Security Income SSI, General Information, 2013 Edition, US Social Security Administration

The information provided is not written or intended as specific tax or legal advice and may not be relied on for the purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

(1)The Chartered Special Needs Consultant (ChSNC®) - a professional designation awarded to those individuals who've completed 120 hours of academic classes in addition to holding either Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC) or Certified Financial Planner (CFP) designations and previously completing the Special Care Planner certification program. The ChSNC designation was developed by The American College in Bryn Mawr, Pennsylvania. The certification program and the professional designation evolved from MassMutual's SpecialCare(SM) Program.

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