By Alessandra Malito
One strategy is to have your wife start collecting her benefits at her FRA, that way your son can collect half of her amount. Then, when you turn 70, he start collecting your benefit, said Alexandria Dunn, a certified financial planner and wealth adviser at Affinia Financial Group. (Children are eligible to claim up to half of a parent’s full retirement benefit past 18 if they have a disability that began prior to age 22, and for survivor benefits, they can get up to 75% of the deceased parent’s basic Social Security benefit, according to the Social Security Administration ).
I often suggest people reach out to a financial planner, who can look closely at the minute details and financial statements and make an actionable plan based on their needs and goals. I’m going to suggest that to you as well! Having a professional could really pay off, as he or she will be best able to determine how you can draw down your retirement savings in a meaningful yet efficient and tax-advantageous way.
If you do go this route, look for an adviser who specializes in special needs planning, as they’ll know many of the rules and options available. Here are two additional resources for you to look into: the Academy of Special Needs Planners and the Special Needs Alliance, said Cynthia Haddad, a certified financial planner, partner and wealth adviser at Affinia Financial Group. Those organizations can help you find advisers and attorneys. Haddad and her colleague John Nadworny recently wrote the second edition to their book “The Special Needs Planning Guide: How to Prepare for Every Stage of your Child’s Life,” published by Brookes Publishing and to be released next month.
Bond also recommends working with a family attorney, who could assist you in creating a special needs trust, if that’s right for you. “Many people have made the mistake of naming disabled family members as the beneficiaries of their wills and in leaving assets outright to them, the disabled person can lose eligibility for government assistance programs,” Bond said. “It’s possible a special needs trust is a good option because it will allow you to provide for spending that may improve your son’s quality of life without jeopardizing government monthly income or other services that may be their main ongoing source of support.”
This concept is crucial. You likely want to protect your son’s ability to receive benefits, while also contributing for his benefit as well.
There are two main types of special needs trust: one is a first-party trust, which would be in your son’s name, and the second — and more common option — is a third-party trust, where anyone can contribute money for the beneficiary and upon the death of that person, other beneficiaries named by the grantors receive the remainder. Regardless, make sure if your son is beneficiary to any of your accounts, it’s his trust that’s really named as beneficiary, so that he remains eligible for various benefits, Dunn said.
Also keep in mind what you want in terms of his caretaker, now and in the future. States have varying rules on this, but some allow one parent to be guardian and the other to act as caregiver and receive a Medicaid stipend. Check with your state if this is an option. As morbid as it may feel, think very carefully about who you want to be there for your son when you and your wife aren’t. Who are the key people in your lives? And what roles and responsibilities can they or would they take on? Talk to them about it before you make it official, of course.
Guardianships can be quite restrictive, and have had a bad reputation especially as of late because of Britney Spears’ 14-year-long conservatorship. But in situations where the person is incapable of making his or her own decisions, it may be the only route, Dunn said. There are limited guardianships available, such as those just for healthcare or just financial matters, but an attorney can help you determine what the best avenue is for both you, your son and family.
It’s better to make these decisions now than have someone else make them after you both pass. You may even want to name a co-guardian, who could step in if the current guardian dies.
“Guardianships are court-appointed,” Dunn said. “If the guardian passes away, a new person has to go through the full process the parents did.”
As the saying goes, and as flight attendants remind us every time we’re on a plane, you have to put your own air mask on before helping someone else. This is true even in your situation. Figure out how much money you’ll need in retirement, estimate your spending in this next chapter and get a handle on your expenses. Then you’ll know where you stand and how you can help your son.
“We always start with: Take care of mom and dad first,” Haddad said.
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