A special need for financial advice

Game changer /

Special needs planning

A special need for financial advice

Advisers don't have to be experts to help special needs families get a jump on lifelong planning

By Liz Skinner — September 16, 2017

Ellen Rice's father died suddenly this year, and she was surprised to discover he'd left her $1.6 million in property and investments. He had envisioned the inheritance would be a great blessing for a daughter who has struggled financially to care for her severely disabled 14-year-old daughter.

Instead, it's triggered an expensive complication.

The bequest will strip Ms. Rice of Medicaid benefits that now cover approximately $160,000 a year in nighttime nursing care her daughter requires and other special equipment the government health benefits program funds.

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What's even more crushing is that it didn't have to turn out like this. With the proper financial and estate planning tactics, the bequest would have funded a lifetime of specialized care for her daughter.

“When his estate is distributed in the next 30 days, Medicaid will be cut off,” said Scott Adams, a financial adviser and founder of the Special Needs Planning Center. “Planning for family members who have special needs is extremely complex, and you can't make a mistake in this because you have an individual's life on the hook.”

The Rice family, whose names have been changed to protect their privacy, has since hired Mr. Adams to help with future financial decisions, many of which he's faced with his own three children who have special needs.

Dearth of specialists

Unfortunately there aren't enough specialist advisers like Mr. Adams around to meet the growing demands of special needs families.

Disparity between Americans with special needs and advisers who specialize in serving them
Sources: Disability figure: U.S. Census Bureau, specialist estimate: Ted Kurlowicz
disparity between Americans with special needs
and the advisers serving them
Sources: Disability figure: U.S. Census Bureau, specialist estimate: Ted Kurlowicz

Fewer than 1,000 advisers in the United States have expertise in this field, and fewer than 250 have attained the only certification offered for it, the chartered special needs consultant, or ChSNC, according to Ted Kurlowicz, professor of taxation at The American College of Financial Services, which administers the mark. That compares to about 57 million Americans — or 19% of the U.S. population — who have a physical or mental disability that may require their loved ones to figure out how to care for them over their lifetimes.

This disparity calls out to the broader financial advice profession to act. Armed with certain information and resources about the benefits and tools available, any financial adviser can at least help families facing these issues get started on the right path.

“An adviser who is not an expert can still be the quarterback,” said Sten Morgan, a financial planner at Legacy Investment Planning, who has special needs families among his clients. “They don't have to take on sole responsibility, and can help families bring on other team members.”

John Nadworny, an expert in special needs advice and co-founder of Special Needs Financial Planning within Shepherd Financial Partners, agrees, but warns: “You do have to be prepared to ask difficult questions, such as about someone's life expectancy, because you'll need an idea how long you will have to plan for.”

About 64% of financial advisers in the U.S. have had clients come to them requiring special needs planning, according to an InvestmentNews survey last month of 324 advisers. And more than half of all advisers surveyed said they have seen an increase in the number of families in the past five years seeking such help.

About 23% of advisers have not worked with these families but would be open to doing so, while 13% have not served this segment and don't plan to.

It's no surprise that working with these families, many of whom are already stressed out caring for their family members, can be challenging. Advisers who have dedicated even a part of their practice to this specialty describe a pinch on profits, swelling client loads and many emotionally draining conversations.

First a father

Planning also takes longer in most cases with these families, they said.

But when advisers who provide special needs planning were asked in the InvestmentNews survey why they do it, almost 50% said it is emotionally rewarding to help these families. And about 63% do it to accommodate existing clients.

Financial adviser Seth Davis of RMB Capital doesn't specialize in this type of planning, but he helps a few clients a year who are facing difficult decisions. He provides them with some financial planning and guides them to the right organizations for additional support.

“Helping these families is a great relationship builder,” he said. “These are people with scary concerns.”

Generalist advisers who want to help special needs families get the ball rolling need to familiarize themselves with three things: public benefits, legal matters and the financial tools that can protect and provide for individuals with special needs.

Public benefits

Families with members who have lifelong disabilities are in acute need of guidance to make the right decisions about where their loved ones will live after the parents die, who will serve as their protector, and the big one: How will medical and other care be paid for year after year?

After an adviser has determined that an individual with special needs must be incorporated into a client's financial planning, sometimes referred to as “planning retirement for three,” they'll need to assess the costs to provide a lifetime of care and, importantly, whether that person is likely to qualify for public health benefits when they are a legal adult.

To qualify for health, supplemental income, housing and other benefits, disabled individuals typically need to have less than $2,000 in assets and low incomes. Services provided through Medicaid, and the parameters to receive them, vary by state.

Why do you provide special needs planning?*
To accommodate existing clients
Emotionally rewarding to help these families
Have a family member with special needs
I am educated on special needs planning
Fits my firm's business strategies or niches
Do you have any special needs families as clients?
Do you use ABLE accounts 
with any of your clients?
*Based on respondents who have special needs clients. Source: InvestmentNews Research

Now, with President Donald J. Trump calling for an overhaul of Medicaid that would likely leave cash-strapped states to cover more of the costs or provide fewer benefits, families' fears about how they'll care for their loved ones are growing.

“There's a lot of pressure on the system to cut back on these benefits, which puts the onus back on the parents,” said Caleb Harty, principal of Harty Financial.

The relevant details about what is currently available can be found through local chapters of The Arc, an advocacy organization for people with developmental or intellectual disabilities, or through state websites.

If a person qualifies, preserving those benefits becomes paramount; if not, the financial burden on the family will be much steeper.

Legal matters

Documents set up to keep funds out of the disabled person's name are the key to maintaining eligibility for benefits.

Even with government benefits though, families need to set aside resources to pay for therapies, dental care, specialized communication and other equipment, and other costs that won't be covered by public assistance.

52.2%Portion of 
advisers with special needs 
clients who say the demand for such planning has 
increased over 
the past five years

A special needs trust is required so assets can be saved to benefit a person who needs help with daily living. Advisers should identify local attorneys who specialize in creating such trusts and help clients think through whether a professional trustee or a family member should manage and disburse the money. All bequests must be made to the trust, rather than in the person's name.

“Every beneficiary designation, every transfer that might be a gift or might come into the estate through a will has to be scrutinized,” Mr. Kurlowicz said. “You can create a lot of damage by transferring wealth in the wrong way to someone who is disabled.”

Additionally, once a child becomes an adult, someone must become the legal guardian or conservator to make financial, housing, health and other life decisions for them.

Financial tools

The financial pieces of the plan come next, often beginning with insurance that advisers can help families buy to fund the trust after the parents' death.

ABLE accounts (named for the Achieving a Better Life Experience Act of 2014) can be set up for individuals who were diagnosed with a significant disability before turning age 26. Assets in these accounts generally don't count against qualifying for government benefits.

But there are important limitations to these accounts, too. For instance, only $14,000 can be contributed each year, and the accounts can spur means testing for benefits if the assets exceed $100,000.

Many advisers are still learning that these plans even exist. About 37% of advisers said they didn't know what the accounts were, according to the recent InvestmentNews survey. About 14% are using the vehicle with clients.

Special needs 
planning resources
The Arc: Provides informational materials on public benefits for people with intellectual and developmental disabilities, and support through a national presence and local chapters (thearc.org)
Special Needs Alliance: Helps families find experienced (attorneys.specialneedsalliance.org)
Specialized Housing Inc.: Creates independent living situations (specializedhousing.org)
ABLE National Resource Center: Offers information on each state's accounts (ablenrc.org/about/what-are-able-accounts)
The American College: Grants the chartered special needs consultant (ChSNC) designation (theamericancollege.edu)
( + Click for more )

Armed with information about how to preserve benefits and protect the individual with legal and financial safeguards, any adviser can help a client with special needs planning demands establish a solid foundation.

But even though two-thirds of advisers say clients have come to them needing help with special needs planning, there isn't much of a groundswell from the general financial planning community to enhance adviser knowledge in this area.

Education gap

The curriculum to attain the certified financial planner designation does not require any education relating to special needs planning. However, instructors who teach the certification's mandatory estate planning course can include some of the essentials in this class if they choose to, said Dan Drummond, spokesman for the Certified Financial Planner Board of Standards Inc.

The certified private wealth adviser designation from the Investment Management Consultants Association covers special needs trusts as part of a broad lesson on planning for heirs in the estate planning section of its coursework.

The American College, which reports a 25% boost in completion of its ChSNC certification last year, to a total of 242 designees, also includes some special needs planning curriculum in one of the nine courses that is required for its chartered financial consultant designation.

This same course will be part of a new ChFC package for professionals who already hold a CFP, according to Mr. Kurlowicz.

The chartered life underwriter designation, also offered by The American College, includes two of the ChSNC courses as electives.

(More: Tips for 
helping special needs families)

To enable more advisers to serve this growing need, generalist planning designations should consider requiring courses dedicated to this topic. It would go a long way toward educating their mark holders and benefiting a portion of society with growing financial planning needs.

Specialists would certainly welcome more assistance by the larger adviser population to take some of the demands off of them, though they caution that it's not a transactional career move.

“You need a combination of knowledge, which can be acquired, compassion, and patience — that you either have or you don't,” said Minoti Rajput, a special needs planner and founder of Secure Planning Strategies. “It can't just be about trying to sell these families something that can generate you an income. You can't hurt these people who are already hurting.”

Although it can be emotionally taxing, most special needs planners say it's incredibly fulfilling helping these distressed people who truly benefit from their guidance.

“I say I have the best job in the world because I get to help families, and I make an enormous difference,” Mr. Adams said.

Photo credit: Brad Trent

Mary Anne Ehlert firmly believes that people with special needs deserve the maximum independence to gain self-esteem. Growing up with a younger sister who had cerebral palsy, she found herself pushing her toward a normal experience.

Ms. Ehlert, 67, thrived on taking responsibility for her sibling, even resisting going off to college because she'd be away from her. Her sister's death in 1995 served as a trigger.

“I realized then my purpose on this planet was using what I had learned from her,” she said.

About 70% of Ms. Ehlert's financial planning work today involves special needs, including all types of disabilities and geriatrics. The CEO and founder of Ehlert Financial Group began operating solely as a financial firm and later split her business into several distinct entities.

Her services range from financial management and planning, and selling second-to-die life insurance and long-term-care insurance, to architecture for modifying homes for disabled individuals.

At Lincolnshire, Ill.-based Protected Tomorrows, which handles the special needs services, Ms. Ehlert has built an enterprise with a team of social workers and financial employees who are willing to be paid with “psychic income,” or emotional satisfaction, as well as regular income.

Ms. Ehlert charges about $1,000 to $2,000 per year in fees, and avoids asset management minimums, instead trying to succeed based on serving a lot of people.

For instance, she has developed an online tool so families can perform some of the work themselves, instead of having to pay a professional. Her next initiative will gather families in groups.

She tested the concept recently, bringing together 25 families for two hours a month on Saturdays. Soon these meetings will be available on video, with the goal of assembling parents at multiple sites so she can touch thousands of families to let them know they are part of a community.

She recommends that advisers wanting to help special needs families read widely from the plentiful information available, and encourages them to find an attorney familiar with the field. Many more lawyers today are working in the specialty than financial planners.

Her fundamental objective is to bring together all the different professionals who can contribute their competencies and backgrounds to help people with special needs.

“Families who deal with a disability must learn a whole new way of life,” she said. “We try to plug ourselves in with them, and let them know they are not alone.”

—Vanessa Drucker is a freelance writer.

Financial planner Colin Meeks' entire life and business changed three years ago when he learned his son had autism. The diagnosis prompted Mr. Meeks, 45, to seek out other families of special needs children, as well as specialized planners, to gain as much knowledge as possible about what he could do to help his son and family.

“Learning from others has been a two-way street,” he said. “Nonfinancial issues matter too, like therapies, organizations and testing.”

Mr. Meeks still serves about 150 traditional households at his firm, Maryland Financial Advocates in Baltimore, but his client roster now includes a dozen families dealing with mental disabilities, and he's adding approximately one per month.

meeting families

He urges other planners who may be interested in this specialty to educate themselves. While he was preparing to expand into this field, he joined an academy of special needs planners and local groups, like the Autism Society of Baltimore-Chesapeake, to meet families and understand their challenges.

His special needs practice is more a “labor of love” than a significant profit center, Mr. Meeks said. He's still working out what fee structure works best. Most clients pay him an hourly fee. He also offers a one-time initial meeting for $200, using the time to ascertain if a $1,000-$2,000 full-blown financial plan is required.

He charges based on assets under management if life insurance, asset management or a special needs trust are involved. Some work is pro bono.

Mr. Meeks is confident he will be paid eventually, either by that client or the next person.

“I'd rather give advice now and know it will come back in some shape,” he said.

His guidance frequently deals with government benefits and making sure children have no more than $2,000 in their name when they turn 18, so that they will be eligible for Supplemental Security Income, disability benefits and Medicaid.

Mr. Meeks carefully checks for hidden inheritances, such as a grandparent who may have bequeathed assets, and helps establish a guardianship after age 18.

To spread the word, Mr. Meeks mingles with the special needs community at resource fairs, where he sets up an exhibit table. He also makes presentations at schools and specialty organizations.

“It would be harder for me to understand if I hadn't been personally involved,” he said. “But I deal with it every day, and learn so much from others who have shared my experiences.”

—Vanessa Drucker

About 11 years ago, financial planner Mike Walther enjoyed a good lifestyle, working for an advisory firm with a $5 million minimum. His wife asked him what he would find most rewarding in life going forward, and he realized he wanted to help families with special needs make better decisions and become more financially literate.

Mr. Walther's younger brother had been formally diagnosed during his 30s with autism.

“In the 1970s, my parents had trouble finding the right resources for him,” he said. “Still, he obtained a high school diploma and now has a satisfying job in a public library and participates in social activities. Now I want to set high goals for all the families.”

encourage longer-term planning

Mr. Walther, 50, discovered that most special needs families are so overwhelmed with immediate tasks, like therapy sessions, doctor visits or insurance, that they can hardly “think past Friday.”

He tries to relieve some of that burden and encourages longer-term planning.

For example, even wealthy clients often need access to government resources like Supplemental Security Income, so he suggests planning as early as age 13 if possible. Otherwise, the government's five-year look back period targets any assets in the child's name.

He also uses a nonlegal electronic care guide to spell out a special needs person's likes, dislikes, eccentricities and routines for any future caregivers in years to come.

It sounds simple, but Mr. Walther's primary advice to other planners is to take great care in communicating with these families.

“Always put the condition after the special needs person,” he said. “Rather than saying, 'your Down syndrome client,' it's better to phrase it, 'your client with Down syndrome.'”

His firm, Northbrook, Ill.-based Oak Wealth Advisors, is fee-only and charges competitively in the lower quartile to third of his peers — Mr. Walther aims to keep his services affordable.

He's an avid public speaker within the financial advice industry on these issues, and also addresses religious groups and local school districts.

Each year he teaches a day-long class to financial planning students as part of his mission to “educate the next generation of financial advisers and help the community.”

—Vanessa Drucker

Kane Brolin knows that working with families dealing with special needs issues requires advisers to relate on an empathetic level. The questions facing the family of a blind child will be quite different from those for parents whose son has cerebral palsy, and an adviser must be flexible enough to understand the differences and nuances.

Mr. Brolin, who has been blind since shortly after birth, never assumes he knows what someone needs before they walk in the door.

“I try to listen as much as I talk, not only to the needs of the individual but also to those of the fiduciaries, guardians, conservators and principal decision-makers,” he said. “I try to wrap my head around the less obvious concerns too, particularly those of the family.”

Mr. Brolin, 52, a financial planner and president of Brolin Wealth Management, is increasingly focusing on helping families plan for members with special needs. He attained the chartered special needs consultant certification six months ago. He's worked with eight special needs families so far, in addition to those he's helped pro bono.

For a full-blown special needs plan, which would involve meeting with attorneys and possibly employment counselors or others in the case management arena, Mr. Brolin normally bills $1,500 or more per year.

He makes exceptions for working-class families with modest assets. If they retain him over several years, he might charge as little as $800, likely with less interaction with other professionals.

“I am sensitive to the reality that just getting needed physical, occupational, speech therapy, vehicle modifications, and other equipment and services for a special needs child can run a family at least $20,000 per year. Remember, this is in the USA, where middle-income people often don't even qualify for subsidized social services if they are under the age of 65.”

In his Greater South Bend, Ind., community, clients tend to be private, so he networks first through trusted circles, like attorneys, CPAs, teachers, social services and churches.

“Nobody will give you a list of names,” he said, pointing to HIPAA privacy provisions.

Mr. Brolin serves clients with conditions ranging from intellectual disability, blindness and mobility challenges to serious injuries requiring lifelong therapy.

“Disability is a great equalizer,” Mr. Brolin said. “People may relate more empathetically because they share something money can't fix.”

He guides clients toward understanding the financial ramifications of their estate planning and other decisions, but it's not all about financial assessments.

“Don't start out with the numbers,” Mr. Brolin said. “At some point you must ask what is at stake, but the first meeting should always focus on the needs of the person and family.”

—Vanessa Drucker

What have been your experiences working with special needs clients, or what keeps you from doing so?


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