Advise needed on how to provide for son's lifetime

[Scallywag]

My whole and sole aim in life is to ensure that my autistic son will always have a roof over his head and food on his table even if he never works a day in his life. He's still a child and we (his parents) are in our mid 40s. We don't make a lot of money for golden and pricey California. Our gross is only $150K a year.

Our current life and plan:

We're renting (we just can't afford a house here) so the ultimate goal is to move to Washington when we retire. Closer to family and no state taxes. Plan to buy a small condo and pay it off before either of us die or at least when one of us dies, so we can ensure that our son gets it clear and free. It's going to be his home for life - and for him to rent out if he does not have any independent living skills.

We will be getting an LTC each when we turn 50. Husband has a whole life policy and I don't as I am chronically diabetic. We're in the process of converting all pre tax old 401Ks into ROTH IRAs. Son then doesn't have to sell our assets mandatorily and can live on dividends and interest income.

My husband will get a small flat pension for 30 years from the day he retires or he could opt for a lump sum payout. We don't know which we'd opt for or even which might be the better option (to better support our son by maximizing our incomes at retirement).

Husband and I will get SS. Mine will likely be smaller than his as I make 40% of what he does.

Son will likely get SSDI for life based on our earning records.

My reason for giving this background is to ask for and receive good financial advice from people here. This is a very emotional and sensitive subject for us and our greatest fear is leaving our boy poor or homeless after our times. At this time, he's non verbal and quite severely disabled so that really worries us. Unless he changes remarkably, ha will likely have a guardian who will take financial and legal decisions for him after our time.

We're willing to work very hard to secure his financial future, even taking on another job (or two) to increase cash flow but what can we do to create a solid income stream for our son for his life ? We live very frugally and quietly, investing our time in our son. We do go on vacations but only when we can actually afford to pay cash for them. We carry no credit card balances, have one car that we've paid off and use public transportation when we can. We bulk cook and buy on sales. We brown bag it to woek. Our only "splurge" is on organic foods just for our son, visits to state and national parks as son loves Nature, and annual subscriptions to Morning Star and National Geographic.

This will not change even in the future as we are quite tight-fisted by nature and have always lived this way.

I am still very very very afraid. I still think we're not doing enough or that something isn't quite right with our current plan but can't seem to put my finger on the issue here.

Please, if you see any "holes" in our plan above, could you point those out and give "fixes", please ? Also, would greatly appreciate any advise at this time.

Thank you very much !

[msomnipotent]

Do you have your wills written and a guardian named already?

I just read something the other day about ABLE accounts. I was going to post about them and just havent had time to sit down until now. The odd thing is that the article I read was about 529 plans and just happened to have a paragraph about ABLE accounts as an afterthought. I think you can like a 529 to ABLE to pay for schooling. http://www.ablenrc.org/about/what-are-able-accounts

1. What is an ABLE account?
   ABLE Accounts, which are tax-advantaged savings accounts for individuals with disabilities and their families, were created as a result of the passage of the Stephen Beck Jr., Achieving a Better Life Experience Act of 2014 or better known as the ABLE Act. The beneficiary of the account is the account owner, and income earned by the accounts will not be taxed. Contributions to the account, which can be made by any person (the account beneficiary, family and friends), must be made using post-taxed dollars and will not be tax deductible for purposes of federal taxes, however some states may allow for state income tax deductions for contribution made to an ABLE account.

1. Why the need for ABLE accounts?
   Millions of individuals with disabilities and their families depend on a wide variety of public benefits for income, health care and food and housing assistance. Eligibility for these public benefits (SSI, SNAP, Medicaid) require meeting a means or resource test that limits eligibility to individuals to report more than $2,000 in cash savings, retirement funds and other items of significant value. To remain eligible for these public benefits, an individual must remain poor. For the first time in public policy, the ABLE Act recognizes the extra and significant costs of living with a disability. These include costs, related to raising a child with significant disabilities or a working age adult with disabilities, for accessible housing and transportation, personal assistance services, assistive technology and health care not covered by insurance, Medicaid or Medicare.
   
   For the first time, eligible individuals and their families will be allowed to establish ABLE savings accounts that will largely not affect their eligibility for SSI, Medicaid and other public benefits. The legislation explains further that an ABLE account will, with private savings, "secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, Medicaid, SSI, the beneficiary's employment and other sources."

1. Am I eligible for an ABLE account?
   The ABLE Act limits eligibility to individuals with significant disabilities with an age of onset of disability before turning 26 years of age. If you meet this age criteria and are also receiving benefits already under SSI and/or SSDI, you are automatically eligible to establish an ABLE account. If you are not a recipient of SSI and/or SSDI, but still meet the age of onset disability requirement, you could still be eligible to open an ABLE account if you meet Social Security’s definition and criteria regarding significant functional limitations and receive a letter of certification from a licensed physician. You need not be under the age of 26 to be eligible for an ABLE account. You could be over the age of 26, but must have had an age of onset before the individual’s 26 birthday.

1. Are there limits to how much money can be put in an ABLE account?
   The total annual contributions by all participating individuals, including family and friends, for a single tax year is $15,000. The amount may be adjusted periodically to account for inflation. Under current tax law, $15,000 is the maximum amount that individuals can make as a gift to someone else and not report the gift to the IRS (gift tax exclusion). The total limit over time that could be made to an ABLE account will be subject to the individual state and their limit for education-related 529 savings accounts. Many states have set this limit at more than $300,000 per plan. However, for individuals with disabilities who are recipients of SSI, the ABLE Act sets some further limitations. The first $100,000 in ABLE accounts would be exempted from the SSI $2,000 individual resource limit. If and when an ABLE account exceeds $100,000, the beneficiary’s SSI cash benefit would be suspended until such time as the account falls back below $100,000. It is important to note that while the beneficiary’s eligibility for the SSI cash benefit is suspended, this has no effect on their ability to receive or be eligible to receive medical assistance through Medicaid.
   
   Additionally, upon the death of the beneficiary the state in which the beneficiary lived may file a claim to all or a portion of the funds in the account equal to the amount in which the state spent on the beneficiary through their state Medicaid program. This is commonly known as the “Medicaid Pay-Back” provision and the claim could recoup Medicaid related expenses from the time the account was open.

1. Which expenses are allowed by ABLE accounts?
   A "qualified disability expense" means any expense related to the designated beneficiary as a result of living a life with disabilities. These may include education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services and other expenses which help improve health, independence, and/or quality of life.
2. Can I have more than one ABLE account?
   No. The ABLE Act limits the opportunity to one ABLE account per eligible individual.

1. Do I have to wait for my state to establish a program before opening an account?
   
   No. While the original law passed in 2014 did stipulate that an individual had to open an account in their state of residency, this provision was eliminated by Congress in 2015. This means that regardless of where you might live and whether or not your state has decided to establish an ABLE program, you are free to enroll in any state’s program provided that the program is accepting out of state residents.
   
   To determine which state ABLE programs are accepting out of state programs, please refer to the individual state pages. Examples of state ABLE programs accepting enrollment nationwide include: Ohio, Nebraska, and Tennessee. An example of a state ABLE program only accepting in-state residents would include the Florida ABLE United program.
2. Will states offer options to invest the savings contributed to an ABLE account?
   Like state 529 college savings plans, states do offer qualified individuals and families multiple options to establish ABLE accounts with varied investment strategies. Each individual and family will need to project possible future needs and costs over time, and to assess their risk tolerance for possible future investment strategies to grow their savings. Account contributors or designated beneficiaries are limited, by the ABLE Act, to change the way their money is invested in the account up to two times per year.
3. How is an ABLE account different than a special needs or pooled trust?
   An ABLE Account will provide more choice and control for the beneficiary and family. Cost of establishing an account will likely be considerably less than either a Special Needs Trust (SNT) or Pooled Income Trust. With an ABLE account, account owners will have the ability to control their funds and, if circumstances change, still have other options available to them. Determining which option is the most appropriate will depend upon individual circumstances. For many families, the ABLE account will be a significant and viable option in addition to, rather than instead of, a Trust program. For more information, the webinar on ABLE Accounts, Trusts, Financial and Benefits Planning is archived on our webiste along with its slides and transcript.
4. How Will I know Which State ABLE Program is Right for Me?

As of January 2018 there are over 30 ABLE programs nationawide inviting eligible individuals to open an ABLE account, most of which are enrolling individuals regardless of their state of residence. When comparing State ABLE programs you may want to consider the following questions in order to find a program that best meets your needs:

Opening an Account

• • What proof will the ABLE program require for you to document in order to open an account or show that your disbursements are qualified expenses?
  • Is there a minimum contribution to open an ABLE account?
  • Is there a fee to open an account and, if so, how much is that fee?

Maintaining the Account and Fees

• • Is there a required minimum contribution to your account? If so, what is the amount?
  • Are the fees front end loaded or are they reduced if you leave your funds invested for several years?
  • Are there restrictions on how often you can withdraw funds from your account?

Investment Opportunities

• • What are the investment options the state ABLE program offers?
  • Are the options likely to meet your needs for limiting risk with the growth of your contributed dollars to the ABLE account?
  • Does the program offer any unique or value added program elements to help you save, contribute to your account, grow the account, and manage your invested dollars?
  • Does the state program offer any unique or value added program elements (such as a match or rewards program, financial literacy info or program for beneficiaries) to help you save, contribute to your account, grow the account, and manage your invested dollars? If so, what is it?

Unique to Your State

• • Does your state have a program and, if so, do they offer a state income tax for contributions to their account?
  • Is there a “debit card/purchasing card” available with the program? Are there added costs to this?

For a more detailed understanding of how you can begin to comparing programs and things to think about when preparing to opening an ABLE account, please click here

[disneysteve]

I think the #1 priority should be determining who his guardian will be. Designate someone now in your wills, if you haven't already, but also revisit that decision from time to time if things change.

You mentioned your husband's whole life policy. I would question if that's the best move. Almost always, you are far better off buying term and investing the difference so I'd recommend looking into that.

Do you have life insurance? Just because you're diabetic doesn't necessarily rule out term coverage. If you haven't, I would suggest shopping around and seeing if you can get a policy at a decent price.

It sounds like you're on the right track. I think picking a trustworthy guardian to manage his affairs will be the most important decision you make by far.

[james.hendrickson]

My whole and sole aim in life is to ensure that my autistic son will always have a roof over his head and food on his table even if he never works a day in his life. He's still a child and we (his parents) are in our mid 40s. We don't make a lot of money for golden and pricey California. Our gross is only $150K a year.

Our current life and plan:

We're renting (we just can't afford a house here) so the ultimate goal is to move to Washington when we retire. Closer to family and no state taxes. Plan to buy a small condo and pay it off before either of us die or at least when one of us dies, so we can ensure that our son gets it clear and free. It's going to be his home for life - and for him to rent out if he does not have any independent living skills.

We will be getting an LTC each when we turn 50. Husband has a whole life policy and I don't as I am chronically diabetic. We're in the process of converting all pre tax old 401Ks into ROTH IRAs. Son then doesn't have to sell our assets mandatorily and can live on dividends and interest income.

My husband will get a small flat pension for 30 years from the day he retires or he could opt for a lump sum payout. We don't know which we'd opt for or even which might be the better option (to better support our son by maximizing our incomes at retirement).

Husband and I will get SS. Mine will likely be smaller than his as I make 40% of what he does.

Son will likely get SSDI for life based on our earning records.

My reason for giving this background is to ask for and receive good financial advice from people here. This is a very emotional and sensitive subject for us and our greatest fear is leaving our boy poor or homeless after our times. At this time, he's non verbal and quite severely disabled so that really worries us. Unless he changes remarkably, ha will likely have a guardian who will take financial and legal decisions for him after our time.

We're willing to work very hard to secure his financial future, even taking on another job (or two) to increase cash flow but what can we do to create a solid income stream for our son for his life ? We live very frugally and quietly, investing our time in our son. We do go on vacations but only when we can actually afford to pay cash for them. We carry no credit card balances, have one car that we've paid off and use public transportation when we can. We bulk cook and buy on sales. We brown bag it to woek. Our only "splurge" is on organic foods just for our son, visits to state and national parks as son loves Nature, and annual subscriptions to Morning Star and National Geographic.

This will not change even in the future as we are quite tight-fisted by nature and have always lived this way.

I am still very very very afraid. I still think we're not doing enough or that something isn't quite right with our current plan but can't seem to put my finger on the issue here.

Please, if you see any "holes" in our plan above, could you point those out and give "fixes", please ? Also, would greatly appreciate any advise at this time.

Thank you very much !

I think its amazing that $150,000 per year isn't a lot of money in California.

[butler]

Hi,

We are in somewhat of a similar situation. I don't have any inputs on the long term plan, but I do want to share how State of CA has been helping us with the day-to-day and hope you are already using these resources.

Our 11 years old son is severely disabled since birth --- quadriplegic cerebral palsy with seizures/spasms. For the last 5 years he is on life-support (24 hours ventilator with additional oxygen support); he has no vision, hearing; he cannot take anything by mouth and is G-tube fed and has no voluntary movement, head or trunk control.

Both my wife and I work full time and we are supported by California Children's Services (CCS), Regional Center, IHSS and School District. If you have not so far, please do loook into these resources. We cannot imagine living a normal life with the community support. Our son has a secondary health insurance --- Medi-Cal because of his condition (inspite of our "high" income level --- "high" in quotes because in Sillicon Valley/Bay Area we will still be considered poor). If I were to lose my job and primary insurance (which has happened in the past), Medi-cal will kick in and he will still have insurance. Medi-cal also covers all out of pocket expenses including co-pays, deductibles etc.
CCS supports his therapies, his equipements (shower chair, wheel chair, stander, lift etc.). CCS and Regional Center also provide approximately 100 hours of nursing care a week enabling my wife and I to work full time.

IHSS (In-Home-Support-Services) provides additional support from non-nursing staff whenever we are not able to find nursing care(which is extremely hard to get because of high cost of living in Bay Area). In the last 8 years, we have gone through almost 70+ nurses.

Over the years Regional Center + CCS have also helped us convert our minivan to wheelchair accessible, get a lift installed in his room to lift him to his wheelchair or roll him to his bathroom and get equipment as and when needed.

School District provides home instructions.

My prayers are with you and your family. As a father of a disable child, I can understand what you go through on a daily basis. Good luck to you and your family.

[Scallywag]

Thank you so much for such a detailed post. My son has been a regional center client since age 14 months for what began as a speech delay and is now considered "severe autism". We get Medi-cal for him through the "Deemed Institutionalized" waiver. We're having trouble finding good respite care providers and IHSS workers for him as he is extremely hyperactivity and loud and can be very hard to handle for anyone who is not very high energy themselves. We need a backyard but can't afford anything here.

Our jobs are stressful, and life can be even more stressful, as our neighbors are constantly complaining about the noise my son makes almost 24/7. We understand but are helpless and quite overwhelmed.

I know the regional center will move him into a group home and continue to cover him through Medi-cal if / when we both pass, but I worry about his quality of life if he has no income of his own after our time. I have a friend whose 33-yr-old son lives in assisted living and it's - frankly - not too good. He's just not homeless, that's all. That's why I am fired up and determined to get him an income for life. It's a tall order but I want him to have some sort of paycheck each month so he's not totally dependent on the largess of the government. Don't get me wrong - I have friends with disabled children living in countries, where the Government offers nothing, so I am keenly aware that it could be worse - but I just worry about him being both poor and severely autistic. It's a heart breaking thought and keeps me up at night, fueling my aggressiveness to secure an income for him for life even if he can never work at a job (but I am going to be thrilled if he could) !

We're now in the process of setting up a special needs trust and finding appropriate and willing guardians for him. It's a marathon and I am on this never ending treadmill of "what can I do next for him?"

I wish our lives were less anxiety provoking but it is what it is. I used to cry every day but now I can make it through the day without tears. My heart goes out to you and your wife too. Kudos to you for doing so much - I learned about CCS from you today ! Thank you !

[MooseBucks]

You need to find an attorney that has significant experience with planning for situations such as yours. I’d assume when he is 18 he will qualify for Medicaid and disability. Your trust will need to be set up to cover the costs those programs don’t cover. Although it may make sense in the short term to move to WA you also need to find out what services they cover vs CA.

[LivingAlmostLarge]

You will need to also at age 18 make him independent and get on medicaid and disability. This will need a lawyer to help emancipate him properly? I've done taxes for families who have this sort of situation. Good luck.