Notes, Buckets, and Beneficiaries

December 01, 2023

father holding two children in field

An Introduction to Financial Assistance and Special Needs Planning

By Donald T. Brown, ChFC, CASL, Special Needs Planner, Special Needs Funding Coach 

The search for information and direction about financial assistance (benefits and support provided by government agencies) and special needs planning (preparation for future financial needs) has proven to be especially frustrating for caregivers.  Being able to provide information and resources to help plan for a quality of life and a lifetime of care is the primary focus of a special needs financial planner.

In many states including New Jersey, Medicaid is a primary source of services for dependents with special needs.  While there are multiple ways to remain Medicaid eligible, most often it is necessary for the special needs dependent to have less than $2,000 of assets in their name.  While the relatively new ABLE account, which allows for the accumulation of up to $100,000 in assets outside the this $2,000 resource limit, may help, these accounts are not yet widely available and have numerous limitations that are best addressed in a separate article.

Proper financial and estate planning is vitally important to enabling families and caregivers to plan for their dependent while still preserving their eligibility for government services.  Many people seek out the services of a special needs financial planner  because they are worried about who will take care of their family member or dependent and how will they be able to provide for them after they are gone.  In fact, over 70% of respondents to a 2011 Met Life survey were concerned about three primary financial needs:

  1. Providing for a good quality of life for their dependent
  2. Preserving government benefits eligibility for their dependent
  3. Providing lifetime care for their dependent

Strategies to address all three of these needs center around a few basic ideas.

The combination of estate and financial planning remain the best and most effective way for families to realize their wishes for their dependent.  In the estate planning area using a qualified special needs attorney is critical. While estate planning will encompass individualized plans that will often include additional items, this article will focus on a simple understanding of wills, trusts, and beneficiaries of life insurance and retirement plans.

Wills = Notes

First, most are familiar with what it means to write a will.. A will is in simple terms A NOTE.  If you were leaving someone to watch your home and your family while you went away for a weekend, you would leave them a note (how to reach you, what’s important to know about the house, etc.).   Essentially what a will accomplishes is to legally say what happens to all of your “stuff” and who becomes guardian for your dependents.

Trust = Buckets

The next thing that becomes vital in a successful financial and estate plan is the use of a trust. There are many types of trusts and trying to understand how they work can become confusing for many. There is a particular type of trust commonly known as a SPECIAL NEEDS TRUST which is imperative to enable a special needs dependent retain government services eligibility. In simple terms A TRUST IS A BUCKET!    What does a bucket do?

  • It holds things.  A trust as your personal legal bucket, allows you to be able to put assets in it, either while you are living or when you are gone.   Those assets may be used for your dependent with special needs, while not having the assets be in his or her name.
  • It protect things in it from outside sources.  In the case of special needs planning it protects those assets from eliminating government services eligibility for our dependents with special needs.  Plus, it protects them from unscrupulous people who may want to take advantage of our dependents and from civil litigation such as divorce.   A parent or caregiver could leave assets directly to another relative or caregiver but once that asset is in their personal name; it can become part of a lawsuit or divorce.
  • It allows you to control how things come out of it.  You may pour it out a little at a time or dump it all out at once or anything in between.   A trust, particularly a special needs trust, allows the grantor to control assets so they may be used for a dependent with special needs even after you are gone.

The above is  a basic overview about trusts to help families understand how these important documents make a difference in the lives of our dependents with special needs. Working with qualified special needs attorneys and organizations is critical to the success of your plan!  The last thing you would want to happen after you are gone is having Social Security, Medicaid, or other government agencies determine your trust doesn’t qualify as a special needs trust because it wasn’t written properly by a qualified attorney.  The only thing that corrects this type of problem is time and money: and who will correct the problem after you are gone?

Be Sure to Check Your Beneficiaries

Lastly, knowing that a dependent with special needs cannot have more than $2,000 of assets in their name, here is your easily done actionable item.  Parents and caregivers  need to make sure that a dependent is NOT PRIMARY OR CONTINGENT BENEFICIARY OF ANY LIFE INSURANCE OR RETIREMENT PLANS LIKE 401Ks, IRAs , AND PENSIONS.

In summary, remembering that a will is a note, a trust is a bucket, and that a dependent with special needs should never be a beneficiary on any individual and group benefits is a simple way to begin thinking about and solving the top concerns of families planning for their loved one’s future.


About the Author

Don Brown has been in the financial services industry for more than 30 years. He has been recognized as an industry leader in both personal production and management. Educating individuals and families on how to properly plan for a dependent with special needs is a primary focus of Don’s practice. He regularly presents to local support groups and nonprofit organizations. Don also provides assistance to local businesses and is a board member of his local Chamber of Commerce. In addition, he runs employee workshops on topics including retirement planning to corporate clients. Don demonstrates a broad, long-standing commitment to local community and philanthropic service. He is an over 20-year volunteer with Camp Fatima of New Jersey, an all-volunteer one on one camp for developmentally challenged children. He annually acts as a camp activities staff member as well as serves on their finance committee. Don is a graduate of Rutgers University with a degree in Economics and Finance and holds his Series 6, 7, 63, and 24 security licenses along with his life, annuity, accident and health licenses, and LUTCF, CASL® and ChFC® designations.


Originally posted: 1/17/2017
Reviewed: 12/1/2023