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Perspectives on Parenting©
by Nancy Lambert Davenport

Nancy Davenport's Column:
For Richardson News 03-12-00
Copyright Nancy Lambert Davenport 2000

"A penny saved not always smart"

Elma and Jerry felt helpless when their grandchild, Sarah, was born with disabilities. They visited the hospital, wrung their hands, hugged, cried and fretted until the doctor finally asked them to go home "for a rest."

Instead of resting, they fretted and worried some more, since they are both people who are used to going and doing and fixing. In the process of their fretting, they became concerned about Sarah's future.

"How will Sarah be provided for after her parents and we, her grandparents, are gone?"

Instead of allowing their grown daughter and her husband the right and time to adjust to the situation and come up with their own solutions, the grandparents decided they would "help things along."

They took $ 100,000 from their retirement plan and set up an elaborate investment in Sarah's name. At age two weeks, Sarah was a wealthy little girl.

Elma and Jerry felt better about everything. Life went along well. The whole family adjusted to having Sarah. Sarah thrived, going through school using the special services the school district offered. When she approached age 18, various people advised her parents to apply for government services that might assist Sarah. That is when her parents discovered that because Sarah had this money, now worth about $250,000, she was not eligible for any government benefits.

One could say that she doesn't need government benefits with all that money. Maybe so, but $20,000 annual return on $250,000 at 8 percent - does not go far to provide basic needs, let alone possibly hire someone to assist her with her independent living needs.

What Elma and Jerry needed to have done 18 years ago was not be so impetuous. They needed to have done some homework. For Sarah to receive both government benefits and financial help from granddad and grand mom, they needed to set up a special needs irrevocable trust.

The purpose of the trust is to supplement not supplant any government benefits for which Sarah might be eligible. The trustee of this special needs trust could decide to provide money from the trust for things such as:

Health services not already provided.
Reasonable travel and related expenses of the relatives and friends to visit of Sarah or for Sarah to visit them.
To pay for recreation programs for Sarah.
To pay for therapists, teachers, tutors, etc.
To purchase items for Sarah's enjoyment, such as television, camping gear, or even gifts for friends

This would free Sarah to receive benefits that were her due and still enjoy some assistance from her grandparents. All this simply takes planning and a visit to an attorney knowledgeable in disability regulations.

There are a few in town who specialize in this work. It can be tricky so be sure they really know this field.

It's worth the extra effort.

Thank you to the to the newsletter Financial Topics, Worcester, Massachusetts and our local special needs financial specialist, Ben Franklin.

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Nancy Lambert Davenport
EMAIL: ndavenport@ticnet.com
URL: http://www.nancyldavenport.com