google.com, pub-5103406272782159, DIRECT, f08c47fec0942fa0
  • Stephen Gardner

Special planning for special needs

Having a child with special needs forces parents to plan for retirement and providing for their child in a totally different way than most families. Yet, I see families with special needs children being given the same cookie cutter advice that doesn't work for most people and certainly leaves a lot of variables on the table after they have passed.


Several years ago, I was fortunate to work with a family back east that has a special needs daughter. I didn't meet them until they were in their mid 40's. Up until that point they had struggled financially to provide for their child and the surgeries she required. They had placed money over the years with half a dozen different financial advisors that either didn't grow their money much, lost their money or gave them traditional advice. By the time they came across my book, they were open to looking outside the box.


As we discussed their goals, their worries about who would take care of their child and how to take care of themselves, market loss damage, tax erosion and earning consistent gains, it became obvious that they need a program with guarantees, consistency, flexibility, and premature death protection. They needed one of my insurance contracts.



By this time, the husband was starting to earn good money in his career and the wife was bringing in about $35,000 a year with her work. They had the ability to save, but worried about their daughter's future since she would never be able to work or save or provide for herself. They also didn't want to saddle their other children with a hard financial situation while raising their future families.


After discussing their finances, budget and goals, they determined that each of them would dedicate $500 a month. With each of them contributing that amount, we had $1000 a month to work with. We covered how after a few years they would be able to be their own source of financing on cars and other major purchases. We also discussed how long they wanted to fund the policy.


Neither of them really planned on retiring. They thought it sounded boring and preferred to think in terms of working and playing the way they wanted until they were too old while continuing to working. They planned to work until at least age 80. So that is how we built the plan.


The main goal of this plan was to provide a leveraged lump sum of tax-free money to the husband or family Trust once the mother passed away. The husband had a policy on himself through his work, but the wife had no coverage. As you can see, if something happened to her in year one, they have placed $12,000 and would receive $469,959. This is what they needed. An instant estate that would increase as they aged in the event they don't have a lifetime to build up wealth.


By year 5 they should have around $51,000 and could take out a car loan up to $45,000. Then they can pay it back the smart way and end up with more money back in their pockets. Within a few years they can start financing their second car or mini van as she told me. This strategy will allow them to take advantage of the money they build up for major purchases they would have made through a bank anyway.



However, the original plan at inception was to consistently fund this plan until age 80. What they do with the money along the way to improve their financial situation is extra. Anytime after age 65 they could easily stop contributing, but they want to contribute for as long as they plan to work, but appreciate the flexibility built into the contract.


By age 80 this couple has funded their plan with $384,000 over a 32 year period. The plan is shown to have grown to $794,893 and have a death benefit of $1,178,389 which will pay their family trust the lump sum of tax-free money. If they don't need the money and allow it to continue compounding, the value and death benefit will also continue increasing.


This plan will provide an instant lump sum of tax-free money upon the wife's death. It will also give them a liquid account for car purchases, medical issues they need help paying on, vacation money and whatever else good or bad that comes their way. Best of all, it gives them peace of mind that their daughter will be taken care of when mom is no longer around. It will also give the siblings money to take care of their sister and not put a major financial drain on them.


This plan kills more than two birds with one stone and was the answer this couple had been looking for. Several years into the plan, they are still happily socking away money. It's definitely a plan anyone can use to get consistent growth each year, legally avoid taxes, have liquid access to money for emergencies, vacations, major purchases or supplementing retirement. Whether you have a child with special needs or just want to have greater peace of mind and control over your money, let me show you how a plan can benefit you.



57 views

Stephen Gardner's financial education and investment site.

Stephen teaches about money, finance, getting out of debt and building tax free wealth.