Financial Tool to Enhance Quality of Life After SCI

In this episode of Kessler Foundation’s podcast, Henry Stifel, Ethan Ordog and Nancy Guerin presents, “Financial Tool to Enhance Quality of Life After SCI.”

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Below is an excerpt from the lecture.

Introduction

Before we dive right into it, I kind of wanted to start at, at some point in our all of our lives, all of you, no matter the size of your estate or your current health condition, we'll all probably seek counsel from such specialists as a state attorney. Maybe a wealth advisor. An accountant. You're going to be seeking advice to help out with the basic documents and exercises that we all should be doing on a regular basis and updating in order to be able to express our desires during unpredictable health circumstances that we may face. These documents, that I'm referring to, the majority of us are aware of us, but many of us don't have them in place. It's your basic will, your health care proxy, your Power of Attorney, a living will, possible trusts for asset transfer.



These all help to express our wishes, maintain control, and provide proper oversight in case ever any of you are confronted with an incapacitating or life-threatening situation. In addition to these type of documents, proper exercises like-- go to the next there. Proper exercises like an annual budget, a personal balance sheet, determining what your short and long-term financial goals all can be eventually married into what hopefully would be an investment portfolio to help you reach some of these goals. This type of planning is prudent for anyone. All of these documents and all your planning need to be revisited, revised, and updated. As we all know, a situation like this can have a tremendous financial impact on a family and a individual.



Life Care Plans

The other thing that so many of our families are finally really starting to look to are what we call life care plans. Now, in litigation, and I don't want to bore you with litigation, but litigation you have a plaintiff and a defendant. Somebody did something to somebody who's now suing them for damages, right? As you can imagine, the plaintiff's life care plan says the person's going to live for a very long time and need a lot of money. The defendant, their life care plan says the person's going to live a year and spend $10, right? So we need to get a independent life care plan in a lot of situations that is used as a resource. What is the person really going to need with their set of circumstances, their injury, their availability of public benefits and resources of how much money it's actually going to cost? Because we are only as good as knowing if I have $1 million in a pot for a trust, how much we can spend for different services or different equipment and where we need to find other resources to try to cover those costs. This is why it's so important to make sure that we understand what that individual's needs will be because it impacts everything, okay?



Defining First and Third Party Trusts

So very quickly, and one of the, again, misconceptions is, and in New Jersey, we, unfortunately, have this problem a lot, are the distinction between first and third-party trusts. So first-party trusts are the assets of the individual. So as Henry said earlier, usually, it comes from a legal settlement, inheritance improper planning. One of the big issues that occurs in a lot of these situations, families plan but they don't plan for everything. And they have a life insurance policy at work. They've done all the best planning in the world, but they forgot to change the beneficiary of that policy, and money comes to individual on benefits, and we've to go to court to fix that.



First-party money, the trust sits there. As Henry said earlier, the federal standard is the trust is there to supplement rather than supplant public benefits. If you take nothing else out of what a family asks, "Why do I need a special needs trust?" That is why. It is designed to maintain the benefits without having to basically use all the money that you've either inherited or received in a settlement. The reason first-party trusts everybody says, "We don't want a first-party trust, we want a third-party trust," but you really can't always do that - is because Medicaid and other individuals that potentially have lenable interest. So they've given us benefits. They have a lean against me because I've received services - when I pass away, they're entitled to a payback from the trust.