Good Planning Protects Benefits And Creates Assets


A winning team needs to be established. thIs means finding a financial planner, a lawyer and an accountant each of whom understands the unique challenges and planning opportunities available to families like ours.

A friend walked in to my office one day. He carried a leather briefcase. He put his heavy brown case on my desk then paused with his fingers over the brass clasps. He smiled and looked at me. He waited for me to take the bait and ask, “What do you have in the briefcase?” Knowing him, it could have been anything – some kind of joke, a wild animal, lunch. Finally, I asked him to open the briefcase. He paused – again making me wait, then said:

“The contents of this briefcase show people how the work of a good team – you as the financial planner, an attorney and an accountant – can change people’s lives. The contents show the value of benefits for people with intellectual and developmental disabilities. The contents represent the value of that work.”

My mind was racing trying to think of the one thing that could help people the most that could be in the briefcase. Some legal documents? A lottery ticket? A time machine so I could predict the future? I had taken the bait and my mind raced from possibility to possibility. I gave up and asked him to open the briefcase.

With a flourish, he moved his hands over the clasps, popped them open and opened the briefcase. The image came straight out of a movie as I looked at row after row of neatly wrapped $100 bills. Each pile of bills was bound by a white band stamped with the number $10,000 on it. He said there was $1,000,000 in the briefcase.

My friend asked me if I had seen a million dollars before. I laughed and said no and that I was still waiting. The bills were fake. The planning concept he wanted people to understand, though, was not fake. There is tremendous value in preserving government benefits for our family members with disabilities. People that save and invest for the future can create wealth to supplement those benefits. Tax advantaged investing can increase returns by reducing tax consequences. The work of a good team can be valued in the millions of dollars for families with a special needs member if they take the right steps.

Families with a special needs member should take three major steps forward to preserve benefits and create resources to retire comfortably, pay for major life events for their children and pay for future special needs expenses: 1. Have an estate plan that includes a special needs trust, 2. Save and invest for future needs and, 3. Understand the tax benefits of certain types of retirement accounts.

To do this, a winning team needs to be established. This means finding a financial planner, a lawyer and an accountant each of whom understands the unique challenges and planning opportunities available to families like ours.


An adult with a qualified disability can access government benefit programs. The two primary programs for adults with developmental and intellectual disabilities are Supplemental Security Income (SSI) and Medicaid. SSI provides income. The monthly maximum Federal payment will be $735 for 2017 (some states supplement this amount) for a single individual. “Medicaid” represents many different programs. The two that matter most for adults with developmental disabilities are Medicaid paid health care and Comprehensive Services. Comprehensive Services can be supports to work or volunteer, housing options and other programs designed for the basics of life usually delivered by a nonprofit agency.

These programs can mean benefit values of tens of thousands of dollars per year. SSI at $735 per month means your family member receives $8,820 per year.

Medicaid benefits can be valued even higher. The health benefit of Medicaid means access to health insurance so our family members can visit doctors, get therapy and buy medication. Without Medicaid, there would be health insurance premiums, out of pocket costs and medical expenses. Premiums alone could be $500 per person per year and other costs could be in the thousands or more. Let’s say health insurance and costs would be $1,000 per month.

Adults with developmental disabilities have access to leading nonprofit organizations throughout their states. Many of these only accept funding for their programs through Medicaid funded resources. Local programs in my  community provide housing and they may serve people who need full-time support. They provide meals, nursing and transportation. These benefits can vary from costs of $100 per day to $300 per day.

Altogether, it’s possible that government benefits could provide $60,000 (or far more) of value per year to an adult with a developmental disability. Have you saved for this? An adult who collects $8,820 in SSI plus another $60,000 in Medicaid funded benefits receives $68,820 per year. Over 30 years, that is $2,064,600 in benefits. That’s double the amount my friend had in the briefcase.

Adults with qualifying disabilities do not receive these benefits if they have more than $2,000 in countable resources in their names. Bank accounts, investment accounts, life insurance cash values (over a certain amount) and retirement accounts are examples of countable resources. Certain assets are excluded from the list of countable resources, such as a home that is lived in and a vehicle used for transportation.

Families can take a few steps to preserve benefits by limiting countable resources. Do not give cash to your family member that will be saved. Help your family member spend their SSI and any other income each month so it does not build up in checking accounts. Be careful on funding retirement accounts and meet with employers to make sure they do not fund accounts. And, most important, take the time to find a good lawyer to change your estate plan and to update any beneficiary designations you have made.

In the past, families did not leave any assets to their family member with disabilities to preserve benefits. Since 1993, families can use a planning technique called a special needs trust (or supplemental needs trust). This type of trust gives you the ability to leave all or a portion of your inheritance to benefit your family member with special needs. Properly funded, this type of trust remains a family asset even if there is money left when the person with a disability passes away.

Once funded, the trust can be used to pay for living expenses to improve the quality of life a person can otherwise live who only has SSI and Medicaid. These sources of benefits pay for basic living – like food and shelter. A special needs trust can buy furniture, clothing and electronics. The trust can pay for cable TV, magazine subscriptions, movie tickets, transportation, travel and more. Government benefits enable a person to live. The special needs trust can help make that life enjoyable.

One question people ask is how much to leave in a trust? Financial planners can help families understand how much money they wish to leave in a trust to pay for future quality of life expenses. More often than not, I see families divide estate gifts equally – with a split share for the family member with special needs going to the trust.

Trusts can be complicated and many families delay meeting with an attorney as it can seem overwhelming in making decisions to finalize an estate plan that includes the trust. In the work I do with people and in my Blueprints Financial Planning process, we prefer that families get their estate plan and trust done within 30 days of seeing how important they are (which is 30 days from today if you are reading this article). The special needs trust is the foundation upon which the rest of your financial planning sits and it should be in place as soon as possible.


Our goal is to live the best life possible and have enough money to pay for it. Families like ours have to look to the time when we are no longer here and find ways to provide the best life possible for our family members with special needs. Ideally, we find ways to put money into a special needs trust for those parts of life important to our family member with special needs.

Sometimes, we can find small ways to save that can make a big difference in the future.

People who know me know that I love a good cheeseburger. A few years ago, I was thinking about ways to save more for retirement and future needs and too often I was thinking about this as I was eating a cheeseburger. A lunch in a restaurant costs at least $10, and over one of these cheeseburgers I thought, “What if I have one less cheeseburger a week? How much could that be in the future?” I reviewed what would happen if I saved that $10 per week for 50 weeks per year for the next 25 years, and invested it each year instead. That money, invested at a seven percent rate of return, would be worth more than $33,000 over 25 years. A huge amount of money from one small change in my behavior each week. Look for opportunities in your life to save some small amounts of money – lunches out, too many lattes each week or cutting the cable or telephone bill. Take these savings and invest for your retirement or to fund a trust in the future.

Sometimes, we have to be more directed in making financial choices to save for the future. The average car payment in the US is about $400 per month. That amount of money going to a finance company represents a huge loss of investment potential. Can you drive something different to find big dollars to save? Maybe you will after understanding the value of that car payment. Families that do not have a car payment, and invest the value of that car payment instead, will have close to a million dollars in their account if they invest and earn seven percent over the next 40 years. This is just simple math (and does not represent any particular investment strategy).


As you invest, make sure to take advantage of tax-favored accounts. The Roth IRA may be the best tax and planning tool available to families with a special needs member. Money that goes in to a Roth can be used for your own retirement expenses without paying tax on the money when it comes out. Another major advantage of the Roth IRA is how it transfers to a trust. The Roth IRA transfer does not require any income tax to be paid, unlike a traditional IRA or 401k.

Taxes can eat away at investment account returns so seeking tax-deferred investing just makes sense. Why pay more to the government than required as you accumulate funds? Start to look at retirement accounts after you have emergency funds in place and debt under control. Even in your investment accounts, there are ways to reduce the tax bite. Stock dividends (or stock fund dividends) usually have lower tax rates than securities that pay out income. Municipal bond funds can help reduce taxes as well. Everyone has a unique situation, so consult with your tax and investment professionals to find a way to invest that makes sense for your particular situation.


I will not forget that moment when my friend opened his briefcase and for a short moment I thought I was looking at $1,000,000. Your planning has the abilityto create valuable resources for your family member with special needs. There are potential government benefits. You can find money to save and invest in retirement and investment accounts. You might be able to cut your tax bill. To do this, you need to organize your financial life to move you in that direction. You need a good team of a financial planner, attorney and accountant. Take time this month to get started to protect benefits for your family member with special needs and create the assets needed to give that person the best quality of life possible.•

Rob Wrubel CFP®, AIF®, is a Senior Vice President – Investments with Cascade Investment Group, Inc. member FINRA & SIPC. Rob is also a father of a daughter with Down syndrome. Rob created the Blueprints Planning Process to help families with a special needs member and is author of Protect Your Family. Cascade Investment Group, Inc. is not a tax or legal advisor. You should always consult with your tax advisor or attorney before taking any actions that may have tax consequences.

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