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December 19, 2011 at 09:31 PM
This is the second in a four-part special report on special needs planning for advisors and their clients. In part two below, an example of how the calculator can help a family.
The financial planning portion of Merrill Lynch’s approach to planning for special needs families, using the calculator, says Modesto, Calif.-based Merrill advisor Scott MacDonald, “is a starting point for more customized, sophisticated planning with an advisor if the client chooses” to pursue it. That is what MacDonald’s team does “for hundreds of clients.”
The 10-year-old group at Merrill has used previous versions of the special needs calculator in its planning, but the new version is more user-friendly, with easier inputs, says MacDonald (left), and allows, for example, a sliding scale to accommodate changes in expenses and income, as well as “links for input about what certain expenses might look like, and some guidance about what costs and needs [families] might need to foresee in the future.”
The complexities can indeed be daunting, when a single well-meaning gesture by an uninformed relative can destroy a financial plan through a bequest or beneficiary designation that does not account for special needs laws and regulations and disqualifies a child for aid. Families with a special needs loved one, says MacDonald, are under a lot of pressure.
“They’re forced to wear many hats,” he points out; they have to “advocate for their loved one … at the school district to get them [educational] programs, to get them the resources they need for their disability. They also have to navigate the trusteeship of the child’s assets, his health issues, care management issues, etc. It’s a daunting task. Having basic or traditional advisors—financial, legal, health—doesn’t really fulfill their needs; it’s like trying to cure cancer with a GP [instead of a specialist].”
MacDonald offers an example of how the calculator can be used to ward off financial disaster. First was the case of a California family with a 6-year-old son afflicted with cerebral palsy and a paraplegic because of medical malpractice. The child “can’t walk; eat normal food; feed himself; has very limited use of his arms and no use of his legs; can’t communicate very well or speak well,” says MacDonald, ticking off problems.
The mother and father had to provide 24-hour care, he adds, and navigate issues for proper schooling and physical therapies; the child had to be fed with a feeding tube, two of those feedings coming in the middle of the night. In addition, the parents had to cope with getting adaptive equipment for the house and car, and physical therapy.
