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Planning for special needs

By Jennie L. Phipps ·
Tuesday, December 20, 2011
Posted: 3 pm ET

If you have a special needs child, grandchild or other loved one you plan to give a significant gift to this holiday or as part of your retirement planning, Shomari Hearn, a certified financial planner with Palisades Hudson Financial Group’s Fort Lauderdale office, advises that you give these gifts carefully.

Hearn, who is an expert in the financial issues affecting special needs children and adults, says giving an outright gift or  inheritance of a significant amount of money or other valuable assets, such as property or family heirlooms, to a special needs individual can jeopardize their eligibility to receive means-tested government assistance, such as Supplemental Security Income, or SSI, and Medicaid, now or when they turn 18. That limitation shouldn't keep you from being generous. It just requires you to plan carefully.

Hearn suggests putting a significant gift in a special needs trust. A special needs individual can have more than one trust -- you can open one yourself on his behalf if you would like to continue to have some control over the gift, or you can add the gift to a trust that the parent or guardian of the individual has already established. It requires legal assistance to set up one of these trusts properly, but managing it afterward is something that a qualified financial planner can handle. Or you could do it yourself.

It is important that the special needs individual not be able to access the money in the trust directly, Hearn says. If, for instance, you put money in a trust and the individual would like to use some of it to buy a video game system, don't just pull out the cash and hand it over. Let the trust do the paying.

"Planning for your own retirement and planning to be able to take care of the special needs child who may live for a very long time and not be able to provide for themselves is a very complex planning situation," Hearn says.

But well worth the effort.

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