Q & A: Stephen A. Ehrens, CPA -Financial advice for parents of children with special needs
By Cindy Mindell, CJL
FAIRFIELD - Stephen A. Ehrens understands the financial concerns of parents of special-needs children. As a financial representative with Northwestern Mutual Financial Network, he has worked for nearly a decade to help families address issues of long-term care.
On March 24, Ehrens and attorney Greta E. Solomon, principal with Cohen and Wolf, P.C., will present a free financial-planning workshop for parents and grandparents of children with special needs. Ehrens gave the Ledger a preview of the pair's presentation.
Q: How did you become involved in advocacy for children with special needs?
A: Being that I had a daughter with special needs, I saw a need try to work with families who were experiencing some of the many questions and concerns that I had as a parent and an advisor in the financial field. One of the things I noticed was that there's no central place to provide information for parents. It just seemed like a natural place for me to focus my energies in helping these families whom I'd been involved with through my daughter.
I'm a fulltime financial representative at Northwestern Mutual Financial Network, and a significant portion of my practice is involved in working with families who have children with special needs. Greta is a trust and estate attorney, and works with families on estate planning. She also has a daughter with special needs.
Most of the professionals in this field have children of their own with special needs.
Q: What particular financial-planning issues and tasks pertain to parents and grandparents of children with special needs?
A: One of the main concerns that families need to address is to have a proper will in place. God forbid, something would happen to the parent, what would happen to the special-needs child? Where would the child go? How would the child be provided for? A will would basically designate those specific instructions.
As part of the will, there's something called a special-needs trust, which would be a receptacle for any assets that the parent might leave for the child. By placing assets in this trust, the child will not be disqualified from receiving whatever governmental benefit programs might be available to them, such as Supplemental Security Insurance (SSI), Medicaid, or any one of a number of state or local programs. Typically, if a child has assets, they would be disqualified, so any assets which pass directly from the parent to the child should be put directly into a special-needs trust.
Another common planning tool is called a Letter of Intent. This is a non-legally binding document that provides specific instructions to a guardian who might step into the place of the parent and help raise the child. It basically would give instructions regarding the child's likes and dislikes, habits, things they enjoy doing - things the parent has spent many years learning to figure out.
Q: How do you work with parents who are planning for children with special needs?
A: I help them try to figure out what to do from a financial standpoint. I can work with them in terms of their investments; I also work with many of them regarding insurance. Some of the key insurances that parents might have are life, disability, long-term care.
Life insurance will protect the child if the parent were to die prematurely, but it can also be used as a way to fund the special needs trust at the end of the parent's life. It's very advantageous to use life insurance to fund trust versus actually saving money.
It's very important for a parent to have disability insurance, if God forbid they were to become disabled and not be able to work, then they would still have a need to protect the child, and disability insurance could provide income to the parent which would allow them to continue on with whatever programs were in place for the benefit of the child.
Long-term care insurance is important because if a parent were to end up in a nursing home, they would have to use their existing assets to pay for the cost of that nursing home. If they have long-term care insurance, the insurance could provide for the cost of their care, which would help preserve assets for the benefit of the child.
Q: What general advice would you offer for financial planning in these times?
A: Make sure you're diversified across many different asset classes: stocks, bonds, insurance, real estate. I would recommend that people live within their means. Debt is very expensive and they should look to reduce whatever debt they may have. I would typically recommend that people have emergency money on hand in case they lost their job. In the past, we've recommended three to six months' worth, but everybody's situation is different, and I think it's going to take a lot longer to find a job today. In today's environment, you might have to think in terms of up to a year.
In terms of your portfolio, generally, we tell people that they should rebalance their portfolio at least once a year if not more. People tend to have accounts out there floating around; they could be old 401(k)s, old IRAs, old investment accounts. These accounts all need to be looked at critically and evaluated in terms of the mix of stocks and bonds and mutual funds, and is the allocation of those investments appropriate for the individual?
Stephen Ehrens and Greta Solomon will present a free workshop for parents and grandparents of special-needs children on financial planning and special-needs trusts, on Tuesday, March 24, 7 to 9 p.m., at Congregation Beth El, 1200 Fairfield Woods Road, Fairfield. For information and reservations, contact Susan Mittag at (203) 374-5544 or CongBethEl@aol.com.