Education and Special Needs Planning
These are two sides of the same coin.
There are some things you have to buy when the time is right - seed in the spring, Super Bowl tickets and a college education. Kids and grandkids turn 18 every day. The decisions made (or not made) years before could determine whether they have the skills for tomorrow's high-paying jobs or they settle for less. Even the better career might not cover the costs of crippling debt if they have to borrow the tuition.
Those decisions are part of the planning process. The mechanics are similar to the retirement analysis - expected costs in inflated dollars are priced today. You get a choice of cash now, a periodic savings plan or funding it out of cash flow at the time. The planning software has the current costs of hundreds of colleges.
I stand 5' 8" in my shoes and never had an outside jump shot. My parents decided early on that if I could make it into college, they would help. I have a daily mantra of things for which I am profoundly grateful. That is always near the top. You may have similar decisions to make. You might not need to make them alone. Two parents, up to four grandparents - that spreads the funding opportunities around. Bring it up at Thanksgiving.
If education is important in your family, we can put together not only a financial plan, we can also start greasing the skids for some of the things that go with it. A big one is creating an understanding in the child that good behavior is rewarded. It is easier to justify studying if you have a chance to use it. I encourage parents to ask their college-bound students to visit my office by themselves and talk about their parent's plans. My favorite exercise is to ask them what would be the greatest company in the world to work for - benefits, salary, advancement, product development, PR, cool ads - all of it. Chances are it is a traded stock. Then we put it on market watch (on their cell phone) or even buy some if it is on my "buy" list.
It becomes a real life example of capital in motion towards a specific goal.
They won't get that in history class. I really enjoy doing this and it is all part of the service.
Special Needs is more like early retirement. If you have a child, grandchild or other dependent who cannot and probably will never be able to manage their financial affairs, you need to start thinking past current cash flow. The same analytical tools apply for the raw math but the budget probably has to compete for the same inflows as your own retirement.
We also look at why the individual is incapable (and if there is a chance he or she will become capable). Someone will have to accept the responsibility for managing the assets, paying out the cash and doing the books. Be prepared to consider trustees or guardians outside the immediate family. Sticking Able with Cain's bar tab is not a job he deserves. You want to get your attorney in on this fairly early. Check that any financial arrangements you make will not interfere with or be subject to claims from government support agencies.
Another decision is how you divide your estate and insurance proceeds. When all the kids are fine, most folks make it an even split. You may have to favor your special needs child over your other children to create enough assets to sustain the need. If it takes a disproportionate share of your assets to do for the one what your love and support did for your other children when they needed it most, hold your head high.
We work through these options not long after you come in. In more than a few cases, a lot of other estate, philanthropic and financial planning has been waiting for a clear path. Together we'll find out what you can do and act accordingly.