Special Needs Children

“Human beings are the only creatures that allow their children to come back home”… Bill Cosby

“A three-year-old child is a being who gets almost as much fun out of a fifty-six dollar set of swings as it does out of finding a small green worm”… Bill Vaughn

“Nothing you do for children is ever wasted. They seem not to notice us, hovering, averting our eyes, and they seldom offer thanks, but what we do for them is never wasted.”… Garrison Keillor

We love our children. There are very special to us. There are some children that will need special care all their lives. They are called “Special Needs Children".

A Quick Look At America’s Children

• The number of preschoolers (younger than 5) in the United States in 2006 was estimated at 20.4 million, up slightly from 20.3 million.
• The number of elementary school-age (5 through 13) children was 36.1 million, with high-school age (14 through 17) children numbering 17.2 million.
• States with the highest percentages of older people (65 and older) include Florida (16.8 percent), West Virginia (15.3 percent) and Pennsylvania (15.2 percent). States with the lowest percentages were Alaska (6.8 percent), Utah (8.8 percent) and Georgia (9.7 percent).
• States with the highest percentages of preschoolers include Utah (9.7 percent), Texas (8.2 percent) and Arizona (7.8 percent). States with the lowest percentages were Vermont (5.3 percent), Maine (5.3 percent) and New Hampshire (5.6 percent).
  Source: US Census Press Releases | Minority Population Tops 100 Million...Released: 12:01 A.M. EDT, Thursday, May 17, 2007 | Robert Bernstein | Public Information Office (301) 763-3030/457-3762 (fax) | (301) 457-1037 (TDD)|
  e-mail: pio@census.gov | CB07-70
  Go To:   http://www.census.gov/Press-Release/www/releases/archives/population/010048.html

Who Are Children With Special Health Care Needs –CSHCN
The Department of Health and Human Services, Health Resources and Services Administration, Maternal and Child Health Bureau (MCHB) defines children with special health care needs (CSHCN) as:

“...those who have or are at increased risk for a chronic physical, developmental, behavioral, or emotional condition and who also require health and related services of a type or amount beyond that required by children generally.”

This definition is broad and inclusive, incorporating children and youth with a wide range of conditions and risk factors, and identifies children based on the consequences they experience due to an ongoing health condition. The definition is not anchored to a specific set of health conditions, as CSHCN share many common needs regardless of their specific diagnosis (or whether or not their condition has a clear diagnosis).

Parents of children with special needs require additional planning as these kids suffer from the following disorders:

• ADD/ADHDAD/HD (Attention-Deficit/Hyperactivity Disorder)
• Autism
• Blind/Vision Impaired
• Cerebral Palsy
• Deaf/Hearing Impaired
• Developmental Disabilities/Mental Retardation
• Down Syndrome
• Epilepsy
• Feeding Issues
• Sensory Integration Disorder
• Speech Disorders
• Spina Bifida
  (Note: this list is not inclusive)

4% of our Children…21.8% of Our Households
3.9 percent of children under 18 years of age in the United States, or approximately 10.2 million children, are estimated to have special health care needs. Overall, 21.8 percent of U.S. households with children have at least one child with special health care needs. Source: Data Resource Center for Child and Adolescent Health

Financial Stress
Having a Child With Special Health Care Needs –CSHCN can affect a family’s finances, employment status, and mental health. The demands on families may require that parents cut down their work hours or give up a job, at the same time that they face burdensome out-of-pocket health care costs.

This is a very challenging specialty focus area for Financial Services Professionals. To be sure, you will help most families plan for their normal lifestyle expenses, while at the same time helping them save for their children's college education and then retirement.

Educating Children With Special Health Care Needs –CSHCN
Financial Services Professionals need to be aware that federal law mandates that every child will receive a free and appropriate education in the least restrictive environment. To support their ability to learn in school, three Federal laws apply to children with special needs:

• The Individuals with Disabilities Education Act (IDEA) (1975)
• Section 504 of the Rehabilitation Act of 1973 
• The Americans with Disabilities Act (ADA) (1990).

Different states have different criteria for eligibility, services available, and procedures for implementing their laws. It is important for parents to be aware of these laws and regulations in their particular area.

The Laws

IDEA is a federal law (1975, amended by the Office of Special Education Programs in 1997) that governs all special education services for children in the United States. Under IDEA, in order for a child to be eligible for special education, they must be in one of the following categories: serious emotional disturbance, learning disabilities, mental retardation, traumatic brain injury, autism, vision and hearing impairments, physical disabilities, and other health impairments.

Section 504 is a civil rights statute (1973) that requires that schools not discriminate against children with disabilities and provide them with reasonable accommodations. It covers all programs or activities, whether public or private, that receive federal financial assistance. Reasonable accommodations include untimed tests, sitting in front of the class, modified homework and the provision of necessary services. Typically, children covered under Section 504 either have less severe disabilities than those covered under IDEA or have disabilities that do not fit within the eligibility categories of IDEA. Under section 504, any person who has an impairment that substantially limits a major life activity is considered disabled. Learning and social development are included under the list of major life activities.

The ADA (1990) requires all educational institutions, other than those operated by religious organizations, to meet the needs of children with psychiatric problems. The ADA prohibits the denial of educational services, programs or activities to students with disabilities and prohibits discrimination against all such students. 

Source: The American Academy of Child and Adolescent Psychiatry 3615 Wisconsin Avenue, N.W. Washington, D.C.20016-3007  AACAP

What Percentage Of Students With Disabilities Are Educated In Regular Classrooms?
The percentage of time special needs students spent in a general classroom varied by race/ethnicity. For example, White students with disabilities were more likely than students of any other race/ethnicity to spend 80 percent or more of their day in a general classroom. In contrast, Black students with disabilities were more likely than students of any other race/ethnicity to spend less than 40 percent of their day in a general classroom and were the most likely to receive education in a separate facility for students with disabilities. American Indians/Alaska Natives and Hispanics with disabilities were less likely than students of any other race/ethnicity to receive education in a separate school facility for students with disabilities.

Source: The National Center for Education Statistics (NCES), located within the U.S. Department of Education and the Institute of Education Sciences, is the primary federal entity for collecting and analyzing data related to education.

Finding Schools - Financial Support
Here’s help with finding schools and financial support for educating children with special needs.

•  Locating Community-Based Services to Support Children and Families
  

Lifetime Care for Children With Special Health Care Needs –CSHCN

• Current federal law requires that any inheritance of more than $2,000 can disqualify an individual from federal assistance. For example, Supplemental Security Income (SSI) could be reduced or cancelled for up to three years if a special needs child receives an inheritance or life insurance benefit. Inheritances could also affect eligibility for state assistance programs.
• Leaving assets directly to the child from a parent, grandparent or other relative may disqualify them from government benefits and they may not be capable of managing the asset.
• Naming the child as beneficiary of the life insurance policy, annuity or retirement plan can disqualify them from government benefits.
• If you leave the child's inheritance to another family member to manage on behalf of the child...These assets would then be subject to any bankruptcy, divorce or litigation against the assets' owner. If the owner may predecease the child, the assets would be subject to the terms of the owner's will.

Special Needs Trusts
Special Needs Trusts can help. Special Needs Trusts are legal entities that owns assets i.e. savings, stocks, property or benefits paid from a life insurance policy. A trustee manages the assets (such as investing them or dispersing them) and is not allowed to personally benefit from the trust. The beneciariy is the special needs child.

Reasons to Establish a Special Needs Trust
Special needs Trusts –SNTs play an important role in helping families plan for children with special needs. Here are some of the most compelling reasons to speak with your attorney about establishing an SNT.

1. Preserve public benefits while enhancing your child’s lifestyle. As adults, many individuals with significant special needs obtain basic support from Supplemental Security Income (SSI), which also is the gateway to Medicaid and other critical programs. Since SSI covers only essential expenses, most parents want to supplement their child's lifestyle. But because SSI imposes limits on income and assets, providing funds to the child directly can jeopardize benefits eligibility. Generally, the best solution is placing funds in an SNT. The Social Security Administration (SSA) does not count assets in an SNT as income for determining benefits eligibility because the assets are owned by the trust rather than the child beneficiary.
2. Ensure assets will be used as intended. With an SNT, distribution of assets is directed by trust documents as well as SSA and IRS guidelines. By comparison, if you leave assets to a n “able-bodied” child and ask that some of the funds be used for the sibling with special needs, the child may fail to honor your request, lose the assets to creditors or die prematurely and leave the funds to his or her own children.
3. Allow others to contribute. If you establish the trust now, grandparents and others interested in helping your child can make annual gifts (current federal annual gift exclusion) to the SNT of up to $12,000 ($24,000 for a married couple) without triggering the gift tax or generation-skipping tax. Anyone interested in leaving your child money should be advised to direct bequests to the SNT.
4. Fund the SNT as you wish. SNTs can be funded with cash, securities or other resources. Often, a second-to-die life insurance policy offers the most affordable option, enabling a family to fund an SNT without depleting assets required for other household needs. If assets in an Individual Retirement Account (IRA) will represent a large portion of your estate, it’s important to speak with an attorney about the most tax-efficient way to transfer those assets to an SNT.
5. Identify appropriate distributions. If you establish and fund an SNT while your child is young, you can use the trust like a checking account to pay the child’s expenses. A future trustee can then refer to a record of these payments as a guide in determining necessary and appropriate distributions.
6. Maximize the benefits of a personal injury settlement. If your child wins a sizable settlement, having the payout (often a lump sum plus a structured settlement) directed to a self-settled SNT offers several benefits. Your child will still qualify for public benefits, can use settlement funds for nonessential expenses and may enjoy the financial security of receiving regular payments for life.
7. Enhance matrimonial settlements. If an adult child who receives SSI and Medicaid divorces, having a self-settled SNT drafted through the divorce decree will allow any alimony or lump-sum payment from your child’s ex-spouse to be paid to the trust. With public benefits intact, it’s possible your child may need less from the ex-spouse. That could help ease matrimonial negotiations while still providing your child with ample resources.

Find A Special Needs Attorney

• The Academy of Special Needs Planners assist special needs attorneys in providing the highest quality service and advice to individuals with special needs and to their families.
• The National Association of Estate Planners & Councils (NAEPC) is a national organization of professional estate planners and affiliated Estate Planning Councils focused on establishing and monitoring the highest professional and educational standards. NAEPC fosters public awareness of the quality services rendered by professionals who meet these standards.
• Welcome to WealthCounsel: Allied professionals and attorney work as a team to solve special needs planning problems. A national organization of more than 1,000 firms.