Magazine article The Exceptional Parent

Special Needs Planning

Magazine article The Exceptional Parent

Special Needs Planning

Article excerpt

The first and most important point is that there are NO DO OVERS with special needs planning. If it is not correct the first time, chances are you will no longer be around to do anything about it. I hear a lot of parents say "I don't need to do special needs planning yet, my child is not 18." I usually ask if they have a letter that guarantees that nothing bad can happen to them before their child is 18. Obviously no one does and bad things can and do happen at any time. The good news is doing special needs planning can't cost another penny of allocation as everyone already allocates 100 percent of their cash flow. It is necessary to make the best use of 100% of cash flow to get the best results available for your family. This is true because unlike games when we were young, there are NO DO OVERS.

But what about this concept of allocating 100% of all cash flow? First let's talk about income. Every dollar of income that comes into a household goes into one of three types of buckets, either bills, taxes or savings. These are the only three choices. Next, let's talk about assets and growth of assets. If you have an asset that makes five dollars of interest there are only three things you can do with it. You can spend it, reinvest it, or put it in a different bucket. So even the growth on your assets is allocated. So everyone allocates 100 percent of all cash flow. This means that the only opportunity anyone can have are for growth and planning for the future involves a reallocation of our cash flow. There is never more or extra cash flow. This is true, regardless of income level or assets accumulated. We must understand this because there are NO DO OVERS.

The entire global financial world has changed. It is no longer about asset value. Today, all that matters is is net income personally, and net cash flow in business. Debt for business or personal purposes is like cancer. When either acquire too much debt, they are dead financially. And, once again, with all planning there are NO DO OVERS. And, since there are NO DO OVERS in this type of planning, think about this. If you have a plan, there might be a 99% chance the plan is done correctly, but that leaves a 1% chance it might need to be tweaked. You should have it reviewed now while you have the chance and your plan should be reviewed regularly to ensure the best possible outcome for your situation. I graduated from accounting school over 30 years ago. Half of what I was taught I have never used, and most of the other half is no longer applicable. Taking financial advice based on old techniques is quite dangerous. Remember, there are NO DO OVERS.

What is necessary to make good decisions? The "IT Factor:" proper INFORMATION and proper TIME. Bad decisions come from four things: lack of information, lack of time, too much alcohol, or some combination of the three. Financial health and happiness are the second most important things in life. Health itself is first, however, a lot of that is luck of the draw. Fortunately, we can do something about our financial health. We have some control over it if we are vigilant and seek the proper education and expert help and if we truly understand that there are NO DO OVERS!

So what are the issues to be tackled? There are many, and the major ones are the letter of intent, principles of guardianship, the life plan, legal documents including a special needs trust and, most important of all, proper funding for the special needs trust. Unfortunately there is a $2,000 dollar limit on assets left to an individual with a disability. If the family makes the mistake of bequeathing more, it is likely the beneficiary will lose important benefits until the money is spent below $2,000 dollars and THE 5 YEAR LOOK BACK has been satisfied. Sadly, this is how we treat people with a disability and this has led to a lot of our indigent population and those with intellectual disabilities.

A Letter of Intent is the most important non legal document in special needs planning. …

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