Special Needs? Seek Out An Advisor Who Gets It
When her autistic son, Gregory, was nearing 18, Kathy Hebert made a call to her longtime brokerage firm for financial advice related to his special needs and hung up in tears. They just didn’t get it. Then, she made a cold call to Bank of America Merrill Lynch financial advisor Daniel Cutter who helped Hebert and her husband figure out the special needs puzzle, with the handholding required. “These are really adult decisions, and Dan was aware to the sensitivity that we’re going through, having a plan for Gregory’s life after we’ll be gone,” says the 50-something Fremont-Calif. mom, adding, “It’s so overwhelming.”
Cutter, in San Francisco, and Scott MacDonald, in Modesto, Calif., have built a whole practice—a team of seven FAs and five staffers—around helping families with members with special needs. “It’s really hard for the parents, and there can be difficult family conflicts among the kids because the special needs child gets a lot of attention,” Cutter says. In some cases, parents will give 100% to the child with disability. In those cases, Cutter says he’s had conversations with the other kids “so we can be the bad guys and the parents don’t have to be.”
Cutter walked the Heberts through how they could provide for Gregory as well as his twin siblings—a boy and a girl. They got 529 college savings plans, and are beneficiaries in their parents’ will.
For Gregory, things were a lot more complicated. Cutter created a conservatorship to make sure the Heberts could continue making decisions for Gregory when he turned 18. He had them set up a checking account in Gregory’s name where his SSI benefits come in. His mom was named the representative payee. The next step was setting up a special needs trust and getting a survivorship life insurance policy that will pour into the trust when the second parent dies (this matches the need as the greatest expense and dependence occurs after the parents are gone,
MacDonald notes). For now, the trust is small, and used to supplement Gregory’s lifestyle. He lives at home, attends a day program, and is in a band, the Dream Achievers. His mom, works part-time in the special needs department at a junior high school, sings in a Sweet Adelines International barbershop group, and is a “proud roadie” for her son’s band.
While trusts are the primary planning tool for special needs individuals, new state-sponsored accounts called ABLEs—tax-free savings accounts for people with disabilities—are rolling out, and Cutter and MacDonald say they consistently recommend them. California expects to have its ABLE program up and running by year-end. (ABLEs weren’t available when the Heberts did their initial planning, but they might consider one in the future.) See Fidelity
Launches 529 ABLE Accounts for tips on how to compare state plans.
The plan for Gregory was part of a full financial plan for the family, including retirement planning for the Heberts—dad Christopher is an IT manager at Kaiser Permanente. After seeing all the Merrill team did for Gregory, the Heberts moved their retirement accounts and their revocable living trusts there too. “It’s like your one-stop shop in many ways,” Hebert says.
Her advice for other parents is to look for advisors who have a connection to the special needs world. “It’s the passion that drives them,” she says. In their case that includes a lawyer who helped with Gregory’s application for SSI (he got it on the first try). The next daunting step is researching supportive housing options. Cutter has already given her some leads.