Special needs trusts
Monday, February 20, 2012
Jacob Coughenour had to endure brain and spinal cord surgery after the taxi driver taking him home from school nodded off and crashed the cab.
So, when it came to making sure Jacob would get to keep his settlement money without losing his monthly disability benefits, his mother stepped in.
Joyce Coughenour learned about a special needs trust at a workshop by special needs investment expert Mary Anne Ehlert.
Think of a special needs trust as a legal safe deposit box.
Coughenour knew Jacob, 22, could draw monthly federal Social Security Income payments and state-administrated Medicaid. But her son's $674 a month can only be spent on housing and food. According to the rules, if a person accumulates more than $2,000, the benefit checks stop.
That leaves next to nothing for filling a life with trips to the barber, special sports equipment or dinner with friends.
"What a special needs trust does is give parents the peace of mind of knowing the child will continue to live in the lifestyle in which he was raised," Coughenour says.
So, she reached out to finance experts at Life's Plan Inc. of Lisle. She chose a plan for about $750 a year.
Emergency room planning
When people hear the word "trust," they tend to think big bucks. Most special needs trusts hold less than $100,000. But it isn't always easy for families to put a future plan in motion.
"It's easy to put off future planning because people don't like to contemplate their own mortality," says Kirsten Izatt, a Wheaton attorney who specializes in financial planning for people with disabilities. "It's hard for them to imagine the child's life without them."
Izatt sees the worst-case scenario all too often.
"Families who plan for the child to live with the parents forever end up doing their planning around heart surgery and all kinds of emergency situations," she says. "In these situations, crucial planning is either rushed or it isn't done at all."
While it never fails to shock her, Izatt can understand how families never get around to planning for their children's future amid the daily stresses of juggling doctor's appointments, therapist bills and transportation.
But there is a better way. That's what Penny Schwent of Schaumburg found when she started inputting photos, vignettes and traditions into her Protected Tomorrows album, an online future care planning system. It's a place to record her hopes and dreams for her 19-year-old daughter Emily, who has Angelman syndrome.
The album is a step-by-step Web-based guide that directs parents through preparing for life as they see it for the person with special needs.
"I saw families going to the lawyer's office to make future arrangements, then being so baffled by the decisions they were facing, they simply never went back," says Ehlert.
With few communication skills, Emily Schwent looks to her parents to be her biggest advocates. Now, her mom and dad, Dale, are compiling important things to know about Emily. "It's hard to go there emotionally," Peggy Schwent says, "but we have to think about her life from 22 to 62. We're looking at what we want for her and considering what life would be like without us."