212: Financial Planning for Special Needs Children with Britta Koepf

Welcome to The Wealthy Mom MD Podcast, a podcast for women physicians who want to learn how to live a wealthy life. In this podcast you will learn how to make money work for you, how you can have more of it, and learn the tools to empower you to live a life on purpose. Get ready to up-level your money and your life. I’m your host, Dr. Bonnie Koo.

Hey, everyone, welcome to another episode. So I’ve been looking for someone to talk about the financial considerations that you need to know about and estate planning wise for special needs. Specifically, if you have a special needs child, or maybe you know someone who, whether it’s a relative or a friend that does, and they might be feeling lost or overwhelmed with what they need to do to best prepare for their child. 

Of course, there’s, you know, special needs covers a huge range, right? I’m definitely not an expert on this. I’ve been looking for someone to educate us and I have found her. And so I hope you learn a lot. And really my goal, if you’re listening and this applies to you, is that you get this all done. And if you have things in place, the things that we’ve talked about, I also want to make sure that you’re revisiting this periodically, and especially after major life changes like divorce or major wealth changes. 

And so I’m assuming the same type of changes apply in this case as well. So have a listen to my conversation with Britta. 

Bonnie: Okay, welcome to the show, Britta. 

Britta: Thank you for having me. 

Bonnie: I’m so excited that you’re here because I have been looking for someone when we first met to talk about this topic because it’s something I don’t have expertise in. And I know that many moms in the audience have children with special needs or a relative, or even maybe a sibling. And I even have found it hard to find good information about it. 

And so before we go on and discuss all the things, can you introduce yourself, tell us a bit about what you do and how you got into it? 

Britta: Yeah, my name is Britta Koepf. I am a certified financial planner, as well as a charged special needs consultant. I have been working in finance for about nine years now. About half that time I’ve been kind of focusing on trying to get into the special needs and then mostly working in the special needs market. It’s a very fulfilling place to be working. 

I mostly got into it because I wanted to find a way to both work with money and also help people. Not just make rich people get richer, which I find also very fulfilling. But I wanted at least part of my work to be really helping someone who might otherwise not be doing so great in the world. 

And so a lot of what I do is helping people who may be wealthy themselves, but have a child who might need government benefits that would not be there if they pass along that wealth to their child. And so I sometimes say that what I do is help people’s children not be in poverty, because without the ability to find a way to pass on that wealth and keep the government benefits, these kids and then when they’re adults are forced to have pretty much no assets and very, very little income. 

And without it, a lot of parents think that the only option is to disinherit the child completely. And then they have to rely on siblings or aunts and uncles to support them. And that’s just not, in my mind, the best way to do it. So my job is to help people keep their kids out of poverty, and it’s extremely fulfilling. 

Bonnie: Yeah. And remind me, but I think you also said that some of your clients, they’re the ones with special needs, too. 

Britta: Yes. 

Bonnie: It’s not just the families who have a child or a sibling, right? 

Britta: Yeah, I have some clients who are neurodivergent or have physical or mental disabilities themselves. They chose to work with me both because I understand the disability space, so I have some clients who are going to be in the future needing to be on disability benefits, and they want to plan for it or who are, one spouse is already on disability. And for them, it’s very useful for me to know how to work with these uncertainties as well as the intricacies of how you get the benefits and how they can work into a full financial plan. 

I have other clients who might never need government benefits. They have a disability, but they’re also able to earn money. They’re good with money. They’re able to save money. But when they hire a financial advisor, they want to find someone who understands the needs of someone with a disability, because maybe they have a different way of communicating because they’re neurodivergent and they need a little bit of prodding with some things or understanding of how to keep conversations on track. 

And just understanding the way that different kinds of disabilities or chronic illnesses can affect someone’s finances and just their communication is really helpful for people. 

Bonnie: Well, first of all, I just want to say, and you kind of just said it, is that special needs/disability et cetera isn’t black and white. Because I think it’s easy to say, oh, you’re special needs or you’re not. So there’s like a gradient sort of depending on each person. 

Britta: Yes. 

Bonnie: And so the main thing I want to talk about today is sort of like what are the things that anyone who has in their life, someone with special needs, what are some of the financial things they need to understand and know about? 

For example, the only thing I really know is that there are some special types of trusts, like special needs trusts, and that there’s something called ABLE, A-B-L-E. There’s probably more out there. I’m just trying to think how to structure this, because obviously we can’t go through everything in one 30 minute podcast. But I want to give sort of some broad strokes and also maybe a little push for those parents who have been maybe just avoiding really putting things in place. 

Most people put off estate planning, so there’s that part too. It’s like if anyone’s listening and you have someone in your life with special needs or you know someone, make sure you share this podcast episode so that they know. It’s like, basically, I just want them to seek out help and get all this stuff done. And it’s like a huge peace of mind to have all this stuff taken care of. 

So, all right. So why don’t you walk us through sort of like, what are like the main things that you go through with a new client? 

Britta: So the first thing that is on people’s mind when they come to me depends on where they are in life and how old their kids are or who they’re helping because sometimes it’s, you know, their sibling. But how old that person is, because what’s most important if someone has a three-year-old and what’s most important when they have a 20-year-old and what’s most important when they have a 40-year-old are going to be completely different things. 

Bonnie: Sorry to interrupt. Why don’t we focus on moms with younger children? 

Britta: So the primary concern that a lot of people have when they have children who are maybe under 10, or really under 15 I’d say, is you still have very little idea of who this person is going to grow into. You have your hopes and your dreams, but you don’t know. And when someone has a disability, a lot of the time we have to plan for multiple futures. 

If a child has autism, then that can be anywhere from an adult who is able to live on their own and thrive, manage their own money, make their own money, to someone who will be dependent on their parents or their siblings or their aunts and uncles or their whole community for their entire lives for all their money, won’t be able to manage it, won’t be able to have it. 

And sometimes if someone has a three-year-old who’s just been diagnosed, they don’t know. And so we end up planning for multiple futures and we use different scenarios. And when we’re looking at plans for estate planning, if there’s really any chance that that disability will make it so that they cannot manage money or they’ll be on government benefits, then we need to have that special needs trust in place. 

There are two main varieties, there’s a third party and a first party. So a third party trust is what the parents would be setting up. And the first party trust is kind of what the kids or their guardians will be setting up if the parents don’t get their estate planning in order. 

But a third party trust, you put money in while you’re alive or after your death. So most of the time it’s funded through the estate. But if you have it already in place, sometimes grandparents from their estate will fund it. So it might be around before you die because other relatives or other loved ones will have put money in. 

But it is a trust where the money goes in and you say this money is not going to be controlled by that person with special needs. It is restricted. And the language of the trust, I’m not a lawyer, so I don’t know the exact language, and it’s going to be different in every single state. 

Bonnie: Yeah, but you’ve read a lot, I’m sure. 

Britta: But it’s designed in such a way that says this eventually adult will not have any access to this money. They’ll not be having any control over this money. So government, you should not be counting this money as theirs as long as they fulfill certain requirements. 

And sometimes the trusts are a little bit more restrictive. I prefer them to be as loose as possible while still following the rules so that the trustee can use it for whatever they need, whether that is for entertainment, for clothing. Sometimes you want to avoid food and shelter to keep certain government benefits. But, you know, for paying for the kids’ vacation, you know, all these different things to make sure that they are having a life like you’re dreaming of them having because you’re funding the future with this trust. 

Bonnie: Okay, so the special needs child, because you mentioned the word trustee. So are they a trustee but they – It sounds like it’s a different type of role than a regular trustee of a regular living trust. 

Britta: So the trustee of the trust will, when someone sets it up, the trustee will be the same person who put the money in, usually. 

Bonnie: Okay. 

Britta: Usually it’s set up so it’s the person who put the money in. Once they have died, they name someone else. Either a family member or in my personal opinion it’s better to name a corporate trustee, so a bank. They charge a good bit, but it’s a hard role. But that’s the person who will dictate how the money is invested. They’ll dictate how the money is spent. And they will do all the bookkeeping and follow all the rules that are a big headache. And that’s why you want the corporate trustee so that this child’s life is funded, so it’s a great life but they never have control over the money so they’re still getting their government benefits. 

Bonnie: It almost sounds like an irrevocable trust, but it’s – 

Britta: It is. It’s an irrevocable trust. It’s a kind of irrevocable trust. 

Bonnie: Okay, but it’s a specific type. 

Britta: Mm-hmm. 

Bonnie: Okay, got it. 

Britta: Yeah. So like other trusts, it starts out as a revocable trust most of the time and then turns into an irrevocable trust. And then it just has these restrictions in place to make sure that it’s used specifically for that one party and making sure that they keep their government benefits, if that is the best thing for them. 

Bonnie: So I think the first main point here is that you probably need to get a special needs trust in place. 

Britta: Yeah. 

Bonnie: And as early as possible, it sounds like is what you’re saying. 

Britta: As early as possible. If someone is just starting out and they don’t have any assets, it’s not as important. But if someone has any kind of assets – 

Bonnie: Well, it could be like a retirement account, right? 

Britta: It could, yeah. Oh yeah, that definitely counts. But a lot of the time people are starting out, like when someone has children, once their babies are born, a lot of the time they don’t have much money yet. They might have just graduated from medical school and mostly they have debt to their name. 

So that person, it’s still very important to have the estate plan in place and be planning on that trust. It’s not this fire that needs to be under them. But once someone has assets, it is something that is needed because the moment they’re gone, their child will probably – Well, once both of the parents are gone, they’ll probably be qualifying for some government benefits if they qualify, if they have low enough assets. And making sure that that trust is in place, maintains those benefits. 

Bonnie: I mean, most people will have some sort of 401k or 403b, a Roth IRA and hopefully life insurance in place. And so, yeah, the 403b might not be a lot, but the trust should be like, maybe the second beneficiary. Usually it’s the spouse. 

Britta: Yeah, the spouse and then the trust. 

Bonnie: The trust, yeah. So that’s number one. And then let’s talk about the ABLE thing. Can you tell us what it is and why someone should consider having one? 

Britta: So an ABLE account is kind of an alternative to the trust. It is easier to set up and it’s not expensive to set up. You can set it up right away. And it is essentially kind of a 529, which is a college savings account, only for people with disabilities. And it actually is technically a 529 of a different variety. 

But an ABLE account is a savings vehicle and you put money in, you don’t get the federal deduction that you would in an IRA. And sometimes you can get a state deduction, sometimes you can’t get state deduction. But either way, the money will grow in the account if you are investing it. 

You do have a limit into that account of the gift tax. So I believe that’s $18,000 this year, that’s all that can be put in. That’s not every person can put that in, per beneficiary. So if the parents put the whole amount in, the grandparents can’t put extra. That is pretty limiting. But you can put that money in, you don’t have to set up that trust. And that can grow. It won’t impact any government benefits until it hits $100,000. 

Bonnie: Okay. 

Britta: Once it hits $100,000, it does impact government benefits. 

Bonnie: Okay. So it sounds like it’s not something people would have in addition to a special needs trust. 

Britta: It depends. There are things that if special needs trust pays for, it might impact government benefits, such as paying for rent. And so a lot of the time, you want to avoid paying for that rent if the child is on supplemental security income. However, ABLE accounts can pay for that rent and it won’t have any impact. 

So I have clients who have kids who are 18, 19, and they’ve moved away from home and they’re now in an apartment. And so they put a few hundred dollars into that ABLE account every month, that few hundred dollars goes to pay their rent every month. And so it kind of passes through so that it can keep the government benefits because the parents also can’t pay for rent. But it allows people to kind of get around that problem with losing SSI because of people paying for rent. 

In that case, it can be good to have. Even if someone has a special needs trust. It also allows there to be money that is being used while the parents are alive. And so I don’t usually have people with large ABLE accounts. There are other downsides. It’s subject to Medicaid payback. You don’t want a big ABLE account. 

But another reason to have money in ABLE account is there are ways of giving the child access to spending money through that ABLE account, because if they’re using it to pay for qualified disability expenses, and that can include things like food sometimes, then they can have like a debit card that they use to pay for things. And that is really empowering that they’re not constantly having to ask for money. It feels good. 

It also, because it grows tax-free, there is that benefit. There are reasons to have a small ABLE account. I wouldn’t want it to go over a hundred, but it can be a beneficial tool. And it’s nice to have a small ABLE account in addition to the trust. 

Bonnie: Okay, so what are some other considerations that someone would need to know? 

Britta: So I think the major consideration after the trusts that someone has throughout their child’s life is how are we going to figure out how much money they will need? How are we also going to get them that money? 

Bonnie: Yes, that’s a wild card, right? 

Britta: It’s a wild card. And when you go to a financial advisor, one of the main things they’re going to do, because it’s one of the main things people have asked questions about, is retirement. They’re going to project out your retirement and say, here is how to meet the goal of retirement. And here’s to make sure you have money at the end, you don’t run out. 

And sometimes people do have legacy goals. They want to leave each of their children a hundred thousand dollars or half a million. A lot of the times they say, my kids can figure it out. I don’t need to leave them anything. 

When someone has a kid with special needs, they have to say, I need to make sure I leave X number of dollars, at least X number of dollars to this child. It’s not an afterthought where it would be great if. It is a major priority for these people. So making sure they leave that, we are planning to leave that legacy and also figuring out how much to leave. 

So sometimes people say that it’s planning for multiple retirements because you’re planning for your own retirement and then you’re planning for your child’s retirement after you’re gone, because they’ll probably hit retirement age about the same time you die, statistically. And then you have to plan for yet another 30 years after you’re gone that money will have to last. Or you die early – 

Bonnie: Can we just pause for a second? 

Britta: Yeah. 

Bonnie: I mean, I think we need to acknowledge that there are more challenges when you have a child with special needs in terms of money, right? 

Britta: Yes. 

Bonnie: And so is it safe to say that they’re going to need more money than the average person who doesn’t need to do this? I mean, I think that’s just without question, right? 

Britta: Oh yeah. So almost everyone does need more money if they have children with special needs, both while the child is alive. While you’re raising that child, you have to be paying for therapies and such. And you have to plan for when they’re an adult, supplementing. And when you’re gone, make sure that everything that you had been paying for is covered. 

There are times where the kids are 20 and they’re on their own, they’re launched. And we’re saying, okay, well, we don’t actually need that much more. I mean, you know. But when someone has a young child, we definitely have to prepare for a future when you’re not there. 

Bonnie: It sounds like get a lot of life insurance is what I’m thinking. 

Britta: Frequently. A lot of that is going to be still term. You can still do a lot of this with term. As long as you plan to have that extra money by the time the term runs out and you are saving on the side, you can do this all with a term policy. 

There’s also policies called second to die. So if there are two parents in the picture, you can save some money on a permanent policy because it won’t pay out until the second of you dies. So the spouse won’t get anything, but that way you can fund a trust with that money. 

Bonnie: Oh okay. 

Britta: So if someone is in their thirties and they buy this policy and it says second to die, you can frequently buy it without much cash value. So it’s more expensive than term. It’s definitely more expensive than term, but it lasts for the rest of your life and it will pay out, help fund that trust. It also makes it so if one spouse is not as healthy, they might be able to get that policy because it will last until the other spouse dies. 

I’m sure that there’s some situation out there that I’ve never thought of where someone has gotten folks that were higher with the second to die, but they are an extremely valuable insurance tool with special needs planning because it’s the way to fund an inheritance and special needs requires an inheritance in almost every situation. 

Bonnie: So obviously there are different considerations all around. So in the insurance product, would you say that most insurance agents will be well-versed in this area or are there – 

Britta: No. 

Bonnie: Yeah, that was sort of what I thought. So I’m assuming because this is what you do, you probably work with – Because you’re fee only. 

Britta: I am fee only. 

Bonnie: Yeah. 

Britta: I have my go-to people, but I’ve also talked to other people. There are specialists, insurance providers and there are financial advisors who sell insurance who are specialized. But for me, I just tell the insurance what to get. But I know that there are some, there’s one that I just heard of from a colleague who is also fee only, and he has a daughter who’s on the spectrum. And so he’s looked into this for himself. He’s very involved in the community. So he has worked to be very specialized. 

Bonnie: I mean, that makes sense. Just like in medicine, we have different specialties, right? Like don’t ask me anything about broken bones, I will have no idea. But I’ll know someone who you could talk to. 

Britta: Yeah. 

Bonnie: What else do you think people listening should know? We talked about special needs trusts. We talked a bit about ABLE. We talked about how there are some insurance considerations. We didn’t go through specifics, but I think anyone listening who’s like, oh, I need to look into this. Well, first of all, there’s multiple things to look into and whoever you talk to, hopefully will point you in the right direction when it comes to insurances. So is there anything else? 

Britta: So when it comes to government benefits, it’s important to make yourself knowledgeable on them. And when it comes to the federal benefits, especially social security and SSI, which is the one people can qualify for if they’re low income. A lot of the time they aren’t going to kick in until your kid hits 18. But there are other programs while your kids are growing up and there are sometimes Medicaid waivers that they do qualify for, even if their parents have income. 

There are other supports that you can learn about by getting involved in the special needs community near you. Contact the Arc near you, which is a – 

Bonnie: What’s that? 

Britta: It is a not-for-profit that is national, but they have local chapters that provide education and resources and help. 

Bonnie: How do you spell it? 

Britta: A-R-C. 

Bonnie: Okay. 

Britta: So the Arc. 

Bonnie: I’ll look it up right now while you’re talking. 

Britta: The Board of Developmental Disabilities, all these different things. Use your resources. 

Bonnie: It’s called thearc.org. A-R-C. Yeah, and it says for people with intellectual developmental disabilities. 

Britta: So they are an extremely valuable resource for a lot of parents to learn about all the programs near them and just get involved, find out what’s available. If you have an assigned social worker, they will know things, but they’re probably paid by the government and can be very helpful, but they might not know everything that you would want them to. So get involved. 

Bonnie: And it does stand for something, but it’s not great because it was formed a long time ago. So I’m surprised the name hasn’t changed. 

Britta: Maybe that’s why they just go by Arc because I can kind of think of what it might stand for. 

Bonnie: Yeah, it looks like it’s not capital A-R-C anymore. So yeah. So I don’t think they say it stands for anything anymore in terms of where the name came from. But Arc is a regular word too. 

Britta: Yeah. 

Bonnie: It’s just using terminology that isn’t used anymore, basically. 

Okay. So no, but it’s good to know what these resources are because I think with, for example, when I was seeing a lot of patients with psoriasis, a skin disease, I would always refer them to the national psoriasis foundation or NPF. And that, you know, kind of covered everything. 

And also there was like a nice kind of a legislative arm where they would lobby for certain things. And I think they say about 2% of the population has psoriasis, between 2 and 5%. So it’s sizable enough to kind of make changes when it comes to laws and things like that. I think sort of knowing what are the larger organizations where people can lean on for information is really helpful. 

Now, are you saying that the Arc is a good place to learn about federal and state resources, or is there another place that you think is a good place where people can learn about it besides Chat GPT? 

Britta: So Arc has a lot of information on their website. And my understanding is different chapters can have different degrees of helpfulness. 

Bonnie: Yeah. 

Britta: But generally, if someone has questions, go to their website, see if you can connect with them. There are also local organizations and organizations diagnosis specific. So if someone has a specific diagnosis, look up what organization, national organizations there are related to that diagnosis. 

And they can help with national resources and then find local organizations, either diagnosis specific or local organizations that are just disability focused that might help people connect and learn about local resources, because Medicaid is state specific. And a lot of the guidelines are going to change as soon as you cross that border. 

And so knowing other people in your state, or in some states, like Ohio, some things are county specific. So it is knowing local resources, knowing local rules, state benefits, state taxes. So contacting the local generalists is also great.  And if it’s a big enough part of the population, local diagnosis specific organizations are good. 

Bonnie: I also know this annoying thing about the state stuff is that it is, every state has its own thing. Like the way they tax and even just thinking as a physician, like why do I have to get a license specifically for, for example, I’m moving to Florida. And they ask for the same exact thing that New Jersey asks for. There’s an organization now called the Interpac or something like that, where it’s much easier to get a license now. They kind of accept – It’s almost like reciprocity, but not quite. It’s like a shortened application. You don’t have to do all the things. 

Because I was actually looking on the Florida website and I have to get fingerprinted. I have to get official documents sent from like every – I’m just like, seriously? Because I’m licensed or have been licensed in like five other states. Medicine doesn’t change when you cross a border. Law does, so I understand having to take a bar exam specifically to the state. To me that makes sense. 

But medicine, it’s like, part of me is like, just tell me to pay a fee and I’ll pay it, but please do not make me fill out 10 pages of paperwork. Because I just started doing it and I literally, I’m like, I cannot do this again. Like someone has to do this for me or I’m going to wait until they – the actually joined, so I called them. But the government is so slow moving. It got approved in March and they’re like, oh, it’s going to be at least six months until we figure out how to implement it. 

And then I was like, okay, let me take a stab at it. And I was like, I’m going to wait six months because I can’t deal with this. I’m not paying all these fees and coordinating all this stuff to verify that I passed all these exams, et cetera. 

So anyway, I’m just venting here, but I think it just makes it hard. And that’s just a medical license. And like I said, every state’s different, that’s just got to be tough. 

Okay, so I just want to summarize what we talked about so far. We talked about special needs trust. We talked a bit about ABLE, you know, different insurance considerations, mainly in the life insurance area. And then also just knowing the federal and state sort of rules. Because my guess is, Britta, you probably don’t know every state’s rules. 

Britta: I don’t. 

Bonnie: You know the federal stuff pretty well. 

Britta: I know the federal, I know Ohio. I do work with clients in other states and I know how to find out the information. There aren’t many people specializing, and especially not many fee-only people specializing. So I don’t want to limit myself to just working with people in Ohio because there might be people, you know, there might be states without any fee-only advisors specializing in special needs. 

So I do get pretty well-versed in, you know, as soon as someone comes in from one state I will learn those benefits. And I’m very good at figuring out state taxes. 

Bonnie: Hopefully they have a good CPA who can assist with that and knows that stuff, yeah. 

Britta: Yes. 

Bonnie: Okay. Well, this has been really informative for me. I hope everyone listening, like I said, maybe you know someone who could use this information. I hope it’s been helpful. I hope this is motivating you to either get started. And even if you have met with an estate planning lawyer, those things need to be updated. The trust needs to be funded. 

Britta: Yes. 

Bonnie: You know, one of the biggest mistakes in estate planning land is having a trust, but then never putting anything in the trust. It’s kind of pointless. Especially if they don’t have a financial advisor who is guiding them through the process, I think my guess is it’s something that needs to be revisited with some frequency. 

Britta: Yeah, definitely need to revisit it, especially if you have someone who’s going to be dependent on you for their entire life. 

Bonnie: Yeah. Okay, Britta, how can people find you if they’re interested in working with you, especially if they’re in Ohio, since you know Ohio very well. 

Britta: My website is probably the best place to go to it’s tranquilfp.com. That’s like tranquil FP, like tranquil financial planning. So that’s the website to find me. And then there’s on the contact us page, there’s a little questionnaire someone can fill out, that will be sent to my email and I will get back. 

And sometimes someone will fill it out and I’m not a good fit for them. So what I do in that case is I help them find someone because it’s very important to me that someone finds the right advisor and I’m not always the right advisor. So I have like a list of different people to send them to. 

Bonnie: Oh, great. Okay. And we’ll link that all in the show notes. So in case you missed that, it’s so much easier to look at something and just click on the link. 

So, okay. Well, thank you, Britta, so much for your time and for educating us about this very important topic. 

Britta: Thank you for having me. 

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