Since Jayden was born I knew that Randy and I needed to get things in order, like have a will and life insurance policies and a plan in place should the unexpected happen, but time just kept passing by, and nothing ever got put in place. Then Sophia came and all of our concerns from before started becoming bigger concerns now. So again we discussed getting things in order, for both of our girls, and I am happy to say that TODAY we are completing the process of having a plan in place! Of course the idea of not being here for my girls forever, is heartbreaking. But the idea of not being here for my girls, and leaving a huge financial burden on someone else, is even more unsettling. So back in the spring we attended a free seminar at Indiana State University and got a lot of really good information about planning for our future and the girls' future, unique to each one. Then we followed up, one on one, with a financial planner and from there the plan was set into action. He matched us up with an attorney and together, the four of us, are putting our plans on paper and finalizing them!
One thing that I learned about after Sophia was born, was something called a Special Needs Trust. The basic purpose of a special needs trust, also known as a supplemental needs trust, is to provide benefits, by means of a trust, to a beneficiary who would otherwise lose eligibility for public assistance; SSI or Medicaid. Resources including funds in checking accounts, savings accounts, CD's, savings bonds and more, cannot total more than $1500 or the person will not be eligible for Medicaid and more than $2000 and the person cannot be eligible for SSI. Special Needs Trusts do not count as a resource. So in Sophia's case, when she turns 18, she will be eligible for Medicaid and SSI, as long as she doesn't have more than $1500 to her name. But with her trust in place, should anything ever happen to Randy and I, she will have a nest egg for her future that can be distributed out to her to help her live and pay expenses that aren't covered through government programs.
There are two types of Special Needs Trusts. The first Trust is an account funded by the parents or grandparents (the Donors) of a person receiving government benefits. Most Donors, people/person funding the trust, choose to fund the Trust account for their child or grandchild upon their death- either through their will, living trust, retirement account or life insurance proceeds. With this type of trust, typically, the account is annuitized over the course of the Beneficiary's lifetime, creating an annual spending projection. Setting an annual spending limit ensures that there will always be money in the Beneficiary's account throughout the course of his or her lifetime.
The second Trust is a Special Needs Trust which is set up by the person for whom the Trust is for, like Sophia setting up a Trust using her own money, and still being able to retain Medicaid and SSI benefits. People receiving an inheritance, a lump sum back-payment from social security or a personal injury settlement, have put their money into a Special Needs Trust rather than spend the money quickly just to stay eligible for government benefits. The intent for the this second Trust was not to be an investment vehicle so much as a temporary safe harbor for persons who have enough money to jeopardize public assistance benefits, but not nearly enough to make long-term plans. So for instance, if Sophia would get a lump sum of say $20,000 from somewhere, that could kick her off of both Medicaid and SSI, but with her doctor bills and living expenses, she would run through that money pretty fast. Now she would be subjected to reapplying for both Medicaid and SSI and have to wait to get back on, all because she had too much money in her name for a period of time. But with this trust, she can tuck that money away and use it over time without losing her Medicaid and SSI. With this Trust, any money left over after the Beneficiary passes away, goes back to the state. But with the first Trust, the one set up by Randy and I, that we plan on funding in our passing, that doesn't happen. Should Sophia pass and their still be money left in her Trust, it could be passed on to Jayden or any surviving children or grandchildren there may be.
Bottom line to all of this is, I've realized just how important it is to make sure that my girls will be taken care of both emotionally and financially. Randy and I have a wonderful support system, that would take our girls in and do whatever needed to be done to ensure that they were happy and healthy. BUT, as their parents, it's our responsibility to plan for their future. We don't want anyone to have to go broke over the fact that they are forced to take in one or two more children that they hadn't planned for. And even more importantly I've realized, with Sophia's needs being some what unique, it's very important that I always have an up to date "Letter of Intent," which not only lists Sophia's medical needs, doctors, likes/dislikes, but it also represents our wishes and desires for Sophia as her parents. So that should someone ever have to take over my job as her Mommy, they would know how to take care of her needs that may not be so "typical," and have an understanding of what Randy and I dream for her, for her future.
This has all been a learning process, which we still aren't 100% knowledgeable about, but pleased to say that we have a plan!