Figure 2-1: Maggie's Situation without Survivor Benefit

Figure 2-2: Maggie's Situation with Survivor Benefit

Figure 2-3: Maggie's Situation with Lump Sum

Figure 2-4: Maggie's Savings Account Balance After Bill's Death

Figure 3-1: The Effect of Life Insurance on Sally's Financial Situation after Sam's Death

Sources:
Expenditures on children by families. United States Department of Agriculture, Center for Nutrition Policy and Promotion Miscellaneous, Publication Number 1528-2006, p.26
Lukemeyer, Anna; Meyers, Marcia K.; Smeeding, Timothy M., 2007, Expensive children in poor families: Out-of-pocket expenditures for the care of disabled and chronically ill children and welfare reform. Center of Policy Research, Maxwell School of Citizenship and Public Affairs, Syracuse University, New York, p. 31.
Figure 4-1: Estimate of yearly child-rearing expenses (vision-impaired vs. non-impaired)

Source:
Link

How can I fund a special needs trust?

A parent with a special needs child should consider buying life insurance to help fund the special needs trust set up for the child's support. What may look like a substantial sum to leave in trust today may run out after several years of paying for care that the parent had previously provided. The more resources available, the better the support that can be provided the child. And if both parents are alive, the cost of "second-to-die" insurance - payable only when the second of the two parents passes away - can be surprisingly low.

Can I create a special needs trust and still be eligible for Medicaid and SSI?

Each public benefits program has restrictions that the special needs trust must comply with in order not to jeopardize the beneficiary's continued eligibility for public benefits. Both Medicaid and SSI are quite restrictive, making it difficult for a beneficiary to create a trust for his or her own benefit and still retain eligibility for Medicaid benefits. But both programs allow two "safe harbors" permitting the creation of special needs trusts with a beneficiary's own money if the trust meets certain requirements.The first of these is called a "payback" or "(d)(4)(A)" trust, referring to the authorizing statute. "Payback" trusts are created with the assets of a disabled individual under age 65 and are established by his or her parent, grandparent, or legal guardian, or by a court. They also must provide that at the beneficiary's death any remaining trust funds will first be used to reimburse the state for Medicaid paid on the beneficiary's behalf.

Medicaid and SSI law also permits "(d)(4)(C)" or "pooled trusts." Such trusts pool the resources of many disabled beneficiaries, and those resources are managed by a nonprofit association. Unlike individual special needs trusts, which may be created only for those under age 65, pooled trusts may be for beneficiaries of any age and may be created by the beneficiary his- or herself. In addition, at the beneficiary's death the state does not have to be repaid for its Medicaid expenses on his or her behalf as long as the funds are retained in the trust for the benefit of other disabled beneficiaries. (At least, that's what the federal law says; some states require reimbursement under all circumstances.) Although a pooled trust is an option for a disabled individual over age 65 who is receiving Medicaid or SSI, those over age 65 who make transfers to the trust will incur a transfer penalty.

What expenses can't a special needs trust pay for?

Special needs trusts are designed to supplement, not replace, the kind of basic support provided by government programs like Medicaid and Supplemental Security Income (SSI). Special needs trusts pay for comforts and luxuries - "special needs" - that could not be paid for by public assistance funds. This means that if money from the trust is used for food or shelter costs on a regular basis or distributed directly to the beneficiary, such payments will count as income to the beneficiary. This can affect eligibility for government benefits like Medicaid and SSI. One of the trustee's most important jobs is to use discretion in making distributions from the trust so as not to jeopardize the beneficiary's eligibility for these government benefits. If the beneficiary receives SSI, here are some basic expenses that should not be paid through a special needs trust without consultation with a special needs attorney. (List developed by Life Plan Trust, Inc., Apex, NC)

Cash given directly to the beneficiary for any purpose

Food or groceries

Restaurant meals (except if given as an occasional gift)

Rent or mortgage payments

Property taxes

Homeowner's or condo association dues

Homeowner's insurance if the insurance is a mortgage requirement

Utilities such as electricity, gas, and water

Utilities hookup or connection charges

However, many of these payments will only cause a one-third reduction in SSI benefits. The trustee may determine that the benefit of the trust making these payments far outweighs the loss of income.

Governmental Benefit programs:

Every disabled adult is entitled to Supplemental Security Income and Medicaid at the minimum, and possibly Social Security and Medicare as well.

Supplemental Security recipients are permitted to hold only a maximum amount of $2,000.00 in assets in their own name. The existence of a special needs trust avoids this difficulty. Likewise, monies which are paid to the disabled individual directly may be deemed as income to the disabled individual, and thus the disabled individual may lose one dollar of governmental benefit for every two dollars of income.

A similar dilemma occurs when parents provide in-kind support and maintenance for a disabled adult. Social Security will diminish the monthly benefit and will consider the in-kind support as income to the disabled adult. Social Security will then subtract one dollar for every two dollars of in-kind support provided to the disabled adult. The easiest solution, one which will increase benefits, is to have parents present their adult disabled family members with a bill each month, representing their "fair share" of the cost of home expenses and maintenance of the disabled adult. Parents can require that the disabled adult pay these costs from their governmental benefits. If governmental benefits are insufficient to pay the monthly fair share, then after a period of approximately ninety (90) days, the disabled adult may request that the Social Security Administration provide additional funds to the disabled recipient to provide for the costs of support and maintenance. Under these circumstances the fair share for the support and maintenance of the disabled adult must be less than the maximum benefit amount payable by the Social Security Administration. At this time, Supplemental Security Income pays approximately five hundred dollars per month. Social Security Disability Insurance (SSDI) can pay a larger benefit, based on the disabled person's work history.

Government: SSI and Medicaid:

Supplemental Security Income (SSI) payments for children with disabilities:

Supplemental Security recipients are permitted to hold only a maximum amount of $2,000.00 in assets in their own name. The existence of a special needs trust avoids this difficulty. Likewise, monies which are paid to the disabled individual directly may be deemed as income to the disabled individual, and thus the disabled individual may lose one dollar of governmental benefit for every two dollars of income.

SSI rules about disability:

Your child must meet all of the following requirements to be considered disabled and therefore eligible for SSI:

The child must not be working and earning more than $980 a month in 2009. (This earnings amount changes every year.) If he or she is working and earning that much money, we will find that your child is not disabled.

The child must have a physical or mental condition, or a combination of conditions, that results in "marked and severe functional limitations." This means that the condition(s) must very seriously limit your child's activities

The child's condition(s) must have lasted, or be expected to last, at least 12 months; or must be expected to result in death.

If your child's condition(s) results in "marked and severe functional limitations" for at least 12 continuous months, we will find that your child is disabled. But if it does not result in those limitations, or does not last for at least 12 months, we will find that your child is not disabled. Source: http://www.socialsecurity.gov/pubs/10026.html#ssi-benefits

State Children's Health Insurance Program (SCHIP):

The Children's Health Insurance Program (CHIP, formerly the State Children's Health Insurance Program [SCHIP]) was created by the Balanced Budget Act of 1997. SCHIP helps states insure low-income children who are ineligible for Medicaid but cannot afford private insurance.

Other organizations offering aid for blind children:

MEDICAL
National Eye Care Project	Offers medical and surgical assistance to financially disadvantaged persons who are not currently under the care of an ophthalmologist, through a network of volunteer doctors nationwide. Call them for further information on the nearest doctor to you. They are also a resource for information on eye diseases. They do not distribute eyeglasses. 1-800-222-EYES
Knights Templar Eye Foundation	Provides funding for eye treatment, surgery, and hospitalization for US citizens who meet financial criteria. http://www.knightstemplar.org/ktef/
EDUCATION
Foundation for Blind Children	Education, counseling, workshops, therapy. http://www.seeitourway.org/
STUDY	Financial Burden in Families of Children With Special Health Care Needs: Variability Among States Pediatrics 2008;122;13-18 Paul T. Shattuck and Susan L. Parish http://www.pediatrics.org/cgi/content/full/122/1/13

Figure 5-1: Comparison of the total value of Don's portfolio, with and without a zero cost collar

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Source:
CollegeBoard Inc. 2008-09 College Prices. [internet] Collegeboard.com for students (2009) Available
at: http://www.collegeboard.com/student/pay/add-it-up/4494.html/
Figure 6-1: Average estimated undergraduate budgets 2008-09 (enrollment-weighted)

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Source:
College Board Inc. 2008-09 College Prices. [internet] Collegeboard.com for students (2009). Available
at: http://www.collegeboard.com/student/pay/add-it-up
Figure 6-2: Published tuition and fees and room and board (TFRB) costs compared to TFRB net of average grant and education tax benefits per full-time undergraduate student, in constant (2008) dollars, 1993-94, 1998-99, 2003-04 and 2008-09

Source:
Bureau of Labor Statistics (http://www.bls.gov/CPI/)
Figure 6-3: Consumer price index 1999-2008


Financial Aid Options

Low-interest loans: Also known as signature loans, they are granted without collateral.

Grants: Based on income, savings, and other assets, these are given by colleges and other sources to students and need not be paid back.

Scholarships: These come in a huge variety of shapes and sizes.

Campus jobs: If you've qualified for a federal work study program, you can work a certain number of hours per week in a campus job, but your income will go toward paying your education.

Source: http://www.amny.com/media/acrobat/2009-02/23136028.pdf

Table 7-1: The True Cost of Minimum Payments

Table 7-2: Mark Slatter's Case

The actual amounts allowed per person have varied over the years, and at press time each person may gift $12,000 per year per person.
Table 9-1: How Estate Planning Could Have Increased Ed's Children's Inheritance

Figure 11-1: Medical Expenses Before and After Layoff