A case that has a special needs element requires a slightly different approach than a “typical” life planning case. Special needs cases can require some unique considerations. To fully understand this market, it’s important to first recognize what special needs are and aren’t.

The special needs spectrum is wide and the community, when viewed as a potential market, is quite broad.  It can include those individuals who develop a special needs circumstance in their adult years, not just those born with special needs, as well as the elderly. Adults can develop a special needs circumstance from a car accident, disease, stroke, etc. And, as the adage “you can’t always judge a book by its cover” teaches, special needs aren’t always what you can see.

First meeting

When approaching a client with a special needs circumstance, it is time to slow down. This is often a long-term, permanent circumstance for this client. 

During the initial meeting, the goals should be to build a relationship, educate and gather general information. Don’t discuss solutions at this time as it is important to not thrust an end result on the client too early. The family may be sensitive and a little wary of an interest in their very personal struggles. Finally, it’s imperative to understand their daily challenges and the fears that keep them up at night.

I try to paint a picture for them of what life could be like with a game plan in place, where all of their wants and wishes for their loved ones have been addressed and planned. Education about the special needs planning process, the types of legal structures that are available to them and an idea of some of the provisions they have already made are also things that should be covered.

During the discussion, identify whether they are in the “mourning” stage or the “acceptance” stage of the diagnosis for the individual with special needs. This is a valuable underpinning to the relationship going forward as it helps to understand how to “meet them where they are.”

This understanding allows the agent to determine what recommendations to first put into place.  A client who is in the acceptance stage is “ready to act” and will be more inclined to move quickly on recommendations as opposed to a client who is still in the mourning stage and “knows they need to do something, but is overwhelmed in starting.” Where the client is in the mourning state, take a slower, more deliberate pace to the recommendations and implementation.   

Important facts to determine at this first meeting are the nature of the special need and the identity of the individual. The individual with special needs could be either elderly, over the age of majority but not elderly, or a minor. The condition and age of the individual will be the pivotal foundation on which the entire plan rests.

If the individual is a minor or is incompetent, guardianship will need to be addressed. If the person is elderly, then this is an end-stage and not a long-term plan. Additionally, who the individual is and what assets they have will be a pivotal component in determining which type of special needs trust (SNT) might be needed.

Third party trusts are created and funded by someone other than the individual with special needs and are most often seen by planners. Reference this decision tree graphic as a resource:

Second meeting

The goal of the second meeting is primarily fact finding. A supplemental fact finder can be used to determine what provisions are already in place, both legally and for care, as well as what the day-to-day situation looks like. Also, assign dollar figures to determine where the money is going to come from and what it is being used or is going to be used for.

In this meeting, a needs analysis can also be used to conduct a thorough review of all beneficiary designations on the client’s current accounts, and review all possible assets. It is important to be sure that the scales for Medicaid or Social Security Income won’t be tipped out of balance due to assets in the loved one’s name, placing government benefits into jeopardy.

An appointment with an attorney can be made at this point to be sure that all of the components of the client’s plan are in place. At this time, the importance of life insurance can also be discussed. Life insurance gives comfort that the client will have the freedom to use existing assets in retirement and still be able to fund the planning for their loved one with special needs. The death benefit will be there within 15 days of the claim and usable immediately, unlike other assets the client may own. This is the best asset for the child’s circumstances and is there for pennies on the dollar. It is universally recognized that life insurance is the single best asset to fund an SNT due to availability of cash when it is needed most.  

At the end of the second meeting, a Letter of Intent workbook can be provided to the parents. A Letter of Intent is a living journal that allows the client to explain the diagnosis, their loved one’s level of functioning, and how the client wishes him or her to be raised if the loved one is still a child. It coveys all the little details of their child’s life — the continuation of which will help ease a difficult transition – such as the person’s favorite color, favorite foods, nighttime rituals, special education, etc. 

Third meeting

At the third meeting, recommendations can be made for what may need to happen. Other professionals who are working with the client can also be identified. It’s imperative for the client to maintain strong, long-term relationships with professionals who are dedicated and focused on special needs planning, such as financial advisors, elder law attorneys and tax specialists. Keep in mind that this is also an estate planning client, a retirement planning client and a long-term care client.

Discuss the protection components of their plan: the life insurance, the SNT and other legal documents as well as educate the client on how to use the trust and what funding it really means.  

A timeline can be developed for future meetings within the initial year and beyond. Share with them the importance of communicating this preparation/planning with their extended family/friends. Those around them need to understand that any “gift” be appropriately directed so as not to put the planning in jeopardy. 

Finally, work with the client on identifying family members and friends in the individual’s life. This is to keep communication alive and let everyone know about the SNT. We ask that any beneficiary designations that might involve the individual with special needs be amended to the trust.

Special needs planning is multi-faceted and unique. Creating recommendations that will fully protect the individual with special needs is truly dependent upon the agent’s ability to listen closely to the parents’ hopes and desires for their child’s future. A team approach, with the agent working alongside other integral special needs providers such as elder law attorneys, CPAs, etc., provides the agent an opportunity to build tremendous relationships with their special needs clients.  The end result is a unified, well thought out plan to care for one who cannot care for themselves. 

 Essential documents to put in place for the special needs case:

  • Will Distribution – Created for all of one’s assets; outright bequests to individuals with special needs can jeopardize access to government benefits or potentially spark payback requirements
  • Powers of Attorney – Created to give another power over your financial affairs and healthcare decisions if you are unable
  • Guardianship – Designated in the will; a person charged with the legal duty to care for a person who is considered incapable of caring for himself/herself
  • Special Needs Trust (SNT) – Provides financial security and the future of your dreams for your loved one without jeopardizing access to government benefits
  • Letter of Intent – Not a legal document, but a guide filled with personal information about the child with special needs and his or her diagnosis to help make the transition to a successor caregiver at a very difficult time