Special Needs Planning Legal and Financial Planning Issues

1. Jon Elfin Sagemark Consulting 3000 Executive Parkway, Ste 400 San Ramon, CA 94583 925-659-0256; jon.elfin@LFG.com Special Needs PlanningLegal and Financial Planning Issues Kevin Urbatsch The Urbatsch Law Firm, P.C. 3478 Buskirk, Suite 300 Pleasant Hill, CA 94523 415-593-9944 Kevin@Urbatsch.com www.UrbLaw.com CRN201309-2085077

2. DisclosuresKevin Urbatsch is not affiliated with Jon Elfin or Sagemark Consulting/Lincoln Financial Advisors.Jon Elfin, CA Insurance License #0D77414, is a registered representative of Lincoln Financial Advisors Corp.Securities offered through Lincoln Financial Advisors Corp. (member SIPC), a broker/dealer. Investment advisory services offered through Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Insurance offered through Lincoln Marketing and Insurance Agency, LLC and Lincoln Associates Insurance Agency, Inc., and other fine companies.Lincoln Financial Advisors does not provide special needs planning.Lincoln Financial Advisors Corp and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances. CRN2277409-101218

3. Topics • Public Benefits • Legal Options • Financial Issues • How much is enough? • Disposition of Your Assets • Tools for building wealth

4. What Steps Should You Take? Envision Your Loved One’s Future Planning ahead makes all the difference: Where and with whom will your loved one live? What type/level of care will be required? Will a conservator or guardian be necessary? Who else will be involved? What kind of lifestyle is desired? Consider potential future challenges?

5. Public Benefit Programs

6. Great InformationalPublic Benefits Website • Disability Benefits 101 • http://ca.db101.org

7. Legal Tool Box If loved one with special needs has capacity, they can execute: • Durable Powers of Attorney for Financial Management • Advance Health Care Directive If loved one with special needs does not have capacity, the following may be needed: • Special Needs Trust • ABLE Account • Conservatorship (Limited or General)

8. Other Arrangements - Not Recommended • Outright inheritance – loss of SSI and Medicaid • Left in non-qualifying trust – loss of SSI and Medicaid • Disinheritance – no money available for loved one with special needs • Leaving assets to brothers or sisters with request to take care of sibling • Subject to creditors • What if they die who then has assets • May not want to take care of brother/sister if have own family • Could be lost in divorce

9. Creating a Memorandum of Intent • Lay out goals/expectations: • Details preferences, needs, wishes, both medical and personal • Lists key people in loved one’s life • Will be the most important document completed by family members • Helps guide: • Family members • Trustee • Caregivers • Others

10. How Much is Enough? • Ask yourself: • How much is needed outside of public benefits provided? • Out of pocket expenses now and projected? • One time expense? • Will benefits last forever? • Calculation variables: • Projected annual expenses • Inflation • Taxes • Rate of return

13. Transferring Your Assets to Special Needs Child Qualified Non-Qualified: Life Insurance Savings Investment Real Estate 401k Policy I Investment Account: Stocks, Bonds & Mutual Funds Home IRA Business Policy II Roth IRA Annuity Owner: RLT, Will, LLC  SNT Annuity- Beneficiary SNT Gift to a Stand-Alone SNT or ABLE Beneficiary  SNT

14. Big Mistakes • Assets left directly to SN child. • Assets left to sibling for the benefit of the SN child.

15. Life Insurance

16. Why Life Insurance? • “I don’t believe in life insurance” or “I don’t need life insurance” • Evaluate as an economic tool for your child. • Tax efficient, guaranteed, leverage • Inherited IRA or 401k • Non-qualified account • 10 year treasury in September 2018 pays 2.98% • Beneficiary is Special Needs Trust • Should compliment your other objectives, not supersede them • Big mistake, little mistake

17. Types of Life Insurance • Term • Permanent • First to die • Second to die • Whole life (WL), Universal Life (UL) or Guaranteed Universal Life (GUL) - less investment risk. • Variable Universal Life (VUL) - more investment risk • Indexed Universal Life (IUL)- medium investment risk • Hybrids

20. Able Accounts • Achieving A Better Life Experience (ABLE) Act • Signed into law December 10, 2014 • Able account money would not impact eligibility for SSI or Medicaid. • IRC 529A- after tax contribution, grows tax free, distributed tax free. • Qualifying disability • SSI or SSDI eligible, or submit certification of disability. • Disabled prior to 26.

21. Idea #2: Able Accounts • Contribution Limitations • $15,000/year from all contributors • Roll overs from UTMAs allowed. • $100,000 maximum or disqualified from benefits. • Limited to one account. • Expenditures • Housing, education, transportation, employment training and support, assistive technology, personal support services, health prevention and wellness, legal fees, expenses for oversight and monitoring, and funeral and burial. • Effective in paying for In-Kind Support and Maintenance Items (ISM), because will not reduce your benefits.

22. Idea #2: Able Accounts • Distribution at death • Included for estate tax purposes • Remaining balance - reimburse Medicaid for expenses incurred after establishment of account- CalABLE exempt (and Oregon and Pennsylvania) per SB 218. • State progress • Available in more than half the states. California- not yet. • www.ablenrc.org • Open to out of state residents • Debit cards.

23. ABLE Account Mechanics

24. Questions? ?

25. Additional Materials • Administering the California Special Needs Trust, 2nd Edition, (2017) available on Amazon.com or through author’s office at Kevin@Urbatsch.com • Special Needs Trusts: Planning For Your Child’s Financial Future, (2018) 7th Ed. available on Amazon.com