Financial Planning for Children With Special Needs

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Welcome to Barron's The Way Forward podcast. I'm Greg Bartalis. Today's guest has a unique and inspiring story to tell. Ken Van Leeuwen provides financial planning for children with special needs, and he does so from a position of firsthand knowledge, as his son James has autism. In 1997, Ken founded Van Leeuwen and Company, a Princeton, New Jersey-based firm. Before that, he worked for 18 years at several financial institutions, including Merrill Lynch and Morgan Stanley. Today, Ken will explain what parents of children with special needs must know and describe what motivates him to focus on an area of financial planning that can hardly be described as lucrative, yet that pays off in many other ways. Ken, welcome.

Thank you, Greg. Pleasure to be here.

Well, I'm very glad you found the time to join us. Now, there's a lot to talk about, but before we get into specific advice, please share your story, what happened in your life both professionally and personally that led you to where you are today and starting your firm in 1997?

Basically, I started my firm for the desire to be able to help people, not to meet sales quotas and push product, but basically was that was the core was to be what we practice today, Greg, which is a fiduciary. For people's interest first and foremost. That's why we started Van Lewen and Company.

So tell me now, what kind of services does your firm offer?

Well, we, we specialize, uh, Greg, in, in planning for corporate executives. Um, that is our main focus in doing financial planning. Um, but also we have a, we have a specialty in serving families with special needs. Children and special needs adults as, as frankly, these children become adults and go through what we call the lifespan of growing up and going from infants to now hopefully working adults. So again, you know, there's different steps along the way in that, in both fields, and both are extremely gratifying when you do it properly.

I read an article that you wrote, I believe it was 2 years ago, in which you identify 6 key things that parents with special needs children should do. And I'd like to run through the list point by point and ask you to provide a little color and context on each point. We could just maybe talk about each one for a minute or 2 so we keep the pace going a little bit. The first thing you mentioned was accepting the reality of the situation.

What happens when the parents— and which is really important, Greg, to remember is that my wife and I were in the same shoes as people listening to me potentially or clients we serve. So we've been there, we lived this situation, and we're continuing to live this situation, which I think is so crucially important. Because when you get the diagnosis that your child is autistic, you face a hard reality or you face a decision point in your life because we all know about the horrors of autism, but we all come in at the belief that frankly, through therapies, that your child will be fine because you love your children, of course, and you just believe that by working diligently through the various therapies, you know, that your child will grow up normally. That is a hope, but frankly, most children don't turn out to what they call live normal lives who've gotten that diagnosis for autism.

When you say accept the reality of the situation, that suggests a degree of denial. Is that the case? And if so, how does it manifest itself and over what time horizon?

Well, when you first get the diagnosis, of course, right, you know, first it's disbelief, but then you dig in, for lack of a better word, and most parents, or, you know, they, okay, what can I do now? What can I do to help my child now? Like, so they look for special school programs, they look for help, you know, with their child in terms of the various therapies, because in the autism community, there's a general belief that the earlier you can, or what they call early intervention, the earlier you begin to work with your child with autism, autism, the better it is, which is very true. But also what happens is parents can devote a lot of energy and resources to that stage and ignore the really the long-term effects in terms of what is your child going to be like? What are they going to grow up? What are their needs going to be? How are they going to be protected? Because let's say if these therapies don't work, or if they just— they work, but you still have a child with autism who basically might not be able to go to college, might not be able to work in a normal job, may not be able to live on its own or in an unsupervised situation. So you have to come to that reality and say, okay, As parents, what can we do now to ensure that our child has the quality of life that we envision for our quote-unquote normal children? So that's what facing the reality is about. Okay.

And now that serves as a perfect launch pad into the other 5 points. So the next one is to have someone to back you up. Uh, who will care for the child if something happens to you?

Yeah, I mean, that's a really crucial point because what happens is, is that the responsibility of having a child with autism is a great one. You know, it involves a lot of care. It involves a lot of monitoring. It involves a lot of extra energy that normal, quote unquote, children don't require. So Now you do it because it's your child and you love them, but now God forbid you're not there or unable to perform those tasks, who will be able to do that? So that's a really important point again, and when you're looking at your estate planning, because it's in your estate planning, your documents, Who would step in to care for your child just as you would, you know? And it could be a loving parent, but your parents are usually older. It could be a sibling, it could be another family member, it could even be a friend. But you really have to look long and hard at who would care for your child if you couldn't, right? And give them the same quality of care that you would, and for lack of a better word, the same love.

So obviously you'd be starting with friends and family, looking there. Um, what would you recommend to someone who, let's say, finds 3, 4, 5 people of equal— where there's equal trust, love, interest, etc., and, and even a similar age, let's say? Like, how do you— beyond those things, what, what should someone think about when deciding Because this is such a big decision.

Well, what's really important is, first off, you just don't— I wouldn't name them in your legal documents without speaking to them, okay? Because that is a very big responsibility. While it may be a responsibility that will never have to be realized, it is a very big responsibility. So you have to know, or they have to know, whether they are prepared mentally and emotionally, should that day come, that they could step in to be you. Now, everybody, you know, loves your child or likes your child. But what happens is the emotion of it, the responsibility, when people sometimes step back, you know, it's a huge responsibility. So they don't want to take on that position.

Or they may say they do, but you— they might not really be able to follow through or might be slightly insincere, right? You have to figure out—

Well, again, I think, you know, and that's why it's really important that you have a good conversation with folks and it's not something you just kind of, you know, mention haphazardly. It's something basically that you say, you know, it's not a decision, frankly, that should be made in 5 minutes. It might take 5 months, 5 years in certain cases, right? It's How do you see that, that family member or that friend interacts with your child when you see them on a, on a somewhat regular basis and is comfortable with them? You know, because people with special needs tend to stand out sometimes in public, and if people can't take the, the embarrassment or the being examined by other people easily, that could be a very tough situation for those people and for the, for the person with autism to be in.

Okay, let's go on to the third point you made, and you really emphasized that this is an incredibly important one. Not that they're all important, but you really seem to put the spotlight on this one: create a special needs trust. And do so as soon as possible if you haven't. Correct.

I think because what, what you— a special needs trust basically is, first of all, a trust is nothing more than an account with rules attached to it. And the rules attached to a special needs trust are ones that the child or the adult does not own these assets directly. They are in a trust. They are governed by a trustee, a trustee who is to make the best financial and lifestyle decisions for the beneficiary. And the beneficiary, of course, is the person with special needs. But also, you need a vehicle because to, to, to get assets, even for your own assets in your estate plan. As we were talking in the earlier point, Greg, when people like 30-somethings, they create estate plans and they have small children, and if they were to die a simultaneous death, what they do is they usually create a trust within their will to manage their children's assets. But in this case, you can't create a quote-unquote normal trust in your will because technically your child with special needs cannot inherit money like your other children might. And that is very important because if they do inherit money or are gifted money for that matter, then what happens is, is that that could disqualify them from various governmental benefits that they could receive.

And that's if it goes over $2,000 or so, right? Correct.

In their name. Correct. So again, and that's why it's also, it's important when you realize people, you know, if in certain cases if you have, you know, and one of the beauties, Greg, of when people find out that they have a diagnosis, they have a child of a diagnosis with special needs, family members tend to rally around, which is actually a beautiful thing because, you know, they realize that this is going to be a different world. So many people, what they'll say is, especially grandparents, will say, oh, you know, Instead of leaving my money, my assets between my 3 kids, I'm going to leave it to 2 of the kids, and I'm going to leave money for, you know, my special needs grandson James. I'll just leave him some money so he has money when he gets older. No, no, no, no, that, that's not the way to do it. That's why You need to create a special needs trust so Grandma and Grandpa can actually, in their documents, leave it to his special needs trust, not to him individually. Exactly.

And I would guess that's a pretty common oversight, right? I assume many, if not most, people wouldn't know that unless they consulted with a professional.

That's, that's very true. And that's why Having a special needs person in one's family is really a family affair. It's about communicating to people. It's about sometimes being direct. You know, a lot of families don't like to talk about money, but amongst themselves, but that's why you need to make it clear that how is best for that. You know, just in a common way, like, hey, if you're going to leave some money to James in your will, I don't know if you're going to do that or not, not, but please don't leave it to him directly. Can you please leave it in a special needs trust? Or, you know, you're going to give James a check for his birthday. Please don't leave it— please don't give it to James in his name. Write the check to James's special needs trust. I mean, in our family's case, that's what we had to do.

And that a little bit crosses into the next point, number 4, which was to make sure all documents are up to date. Because you mentioned in reading things you've written and spoken about, I mean, this is really kind of a marathon. It's not at all the kind of planning where you set it and forget it. This is something you have to be engaged with over time, revisit periodically. You know, speak to that, please.

Sure, because I think what happens, Greg, is that it is not a— it's not, as you mentioned, you do your will one time and it's over and done. First of all, just like we were talking about earlier, was that the people in your life who are going to be looking to your— to care for your child, you know, there's a lot of different circumstances. They move away, they move out of your area, God forbid they pass away, God forbid something happens in their life. So you constantly got to be looking at what I call the players in your life. You've also got to be looking at, in fact, your other children, because while you may not be able to, as you get older, you may not be able to handle the responsibility of, or the legal responsibilities for your child with special needs, but maybe you have a sibling who can become incredibly competent and incredibly loving to their sibling with special needs. So maybe you want to include them, you know, as part of the documents. I mean, again, you don't know that when they're 5, but you certainly get a feeling when they're 30, for example, about how they, they're going to look at their sibling for sure.

And you touched on this, but number 5, having a backup for your backup.

Yeah, you really, you really need to examine, you know, because, um, some people, you know, they're very willing, um, to serve in, in different legal capacities for your child, but they need, you know, but then when the time comes, they may not be ready, or they may not be emotionally ready, or their, their financial situation personally, or their family's financial situ— situation, whether it's emotionally or financially, may be such. So you need to always be prepared with a list of primaries and what we call contingents who are ready to serve. And it is a serve because it's a labor of love. You know, again, it's not It's not easy, um, and it's a lot of responsibility for sure.

And, and speaking of responsibility, the sixth point, uh, recommends working with knowledgeable professionals given that the stakes are so high.

Oh yeah, I mean, you know, when we talked about drafting a special needs trust, um, a special needs trust should be drafted by an attorney who specializes in this type of planning, whether it's estate planning or special needs care planning, because again, it has to be drawn properly. You know, it's not a document that necessarily any attorney can draw up. You know, if a person who specializes, he's a litigator, for example, sure, he talked trust and estates in law school, But he's not the one who should be drafting your trust agreement, okay. Really look for someone in this area or get referrals to someone in this area to help you do that document because that's the cornerstone. Because again, the governmental agencies who provide the benefits to your child or, you know, adult They will be reviewing those documents to make sure they were done accurately and properly before they give the benefits to the families. So again, it has to be a really well-drawn document.

Now, given that this was 2 years ago, perhaps it was around COVID or pre-COVID, would you— if I asked you to add a number 7 to this list right now, is there anything that would come to mind, or do you think these 6 broadly cover the most important aspects?

I think one of the things is that what we learned through COVID, Greg, was that people with special needs were especially vulnerable, just as the seniors were that we learned of in various nursing homes and assisted livings. Adults and children who lived in communal settings, communal settings, group homes, special, you know, organizations where more than one individual is housed, they were also particularly susceptible to the ravages of COVID So again, you may, if as we look to the future, how does one prepare that God forbid we come to another pandemic situation, that, you know, do you want to keep your loved one in that communal setting? Just like people were asking about loved ones who were in nursing homes or assisted livings. It's the same kind of thing because both populations were especially vulnerable to COVID, being that, you know, they were basically enclosed in a communal setting and they just had the helpers and the workers coming in and out on a regular basis. So while we hope never again to face a pandemic, or, you know, like we did, you should keep that in the back of your mind as well.

This is actually an inelegant pivot, but there's no way to do it. I do want to talk about the stock market, given what's been going on. So it's kind of topic A, and I'd be, you know, miss not asking. So high level, what are you doing? Where are you seeing value? What are your thoughts?

You know, I think what we're seeing is, especially the last couple days— of course, this is being recorded on Wednesday, the 26th of January— we're seeing the last few days, last week was especially tough, you know, in terms of volatility and volatility to the downside. The first couple days of this week, you know, we saw the market go down by 1,000 points and then up and up 90. We saw it start strong yesterday, fall, and then rally back. Um, basically what we're telling, um, our clients and what we are doing is we are not reacting to the violent market swings because you're inevitably going to be on the wrong side of the trade. And what I mean by the wrong side of the trade is buying or selling at the wrong time. So frankly, we have, we have very good high-quality companies that we're holding on to. We're actually nibbling a little bit of at some of these really beaten-down names, especially some of the— in some of the areas of what we'll call technology. But technology is a broad area, so we'll start to look at some of these companies, and we are in some of these companies that have, you know, frankly suffered between 15% to 20% declines alone this month. And then, you know, you look at various other areas, you know, you, you know, you— someone a long time ago gave me some really great advice is that, you know, all the different financial conditions that exist every day in our life, but if you you can find it, a really well-run company at a reasonable price, pays a dividend, Greg, in the long run, you'll never go wrong. Yeah.

And do you have a preference in terms of market cap? You're looking big cap? And what about US versus international?

Of course, we like large-cap stocks. They're the easiest to research, the most Information is available about them. You know, we like international as an asset allocation. When we manage portfolios for clients, we tend to use, whether it's an ETF or an active mutual fund for someone who specializes in that. As I heard someone say many years ago as well, was that, you know, now you want me to pick a stock that makes money, but now I've got a deal with geopolitical risks and currency risks at the same time. Hey, it's tough enough to, to buy a U.S. stock and make money, and we know how good this system is.

Yeah, excellent. Well, we're just about out of time, unfortunately, but before we wrap up, I did have a final question, and this is a long-running Barron's tradition where we ask for a piece of actionable advice. So for anyone listening who has a child with special needs, Is there something you could recommend that they could do that's relatively quick and easy to, to improve their lives?

Yes, it's to share your situation with the financial professionals in your life. Don't be embarrassed by what's going on in your life personally with your child. It's important that you speak to whether, you know, we're coming up, it's tax time now, whether you talk to your accountant about it, talk to your investment professional about it, your financial professional, hear them, share with them so that they can get a better idea of where you are. So really, don't be embarrassed, you know, and also realize that you've got to take that short-term outlook, but you've got to look long-term. But communicate, communicate with the professionals in your life, and you'll be sure to benefit over the long run. Excellent.

Well, that's very sound advice, and I appreciate you sharing it and joining us today.

Well, thank you for the opportunity. Again, this is a Again, it's a, it's a, it's a field that's going to give you a lot of emotional satisfaction when you know you've really helped the family. And many of us know we help families every day, but this is a particular family, uh, you know, family situation that needs professionals' help.

My guest has been Ken Van Leeuwen, Managing Director of Van Leeuwen and Company. I'm Greg Bartalis. You've been listening to The Way Forward. Please subscribe and check out all our podcasts at barons.com/podcasts.

This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.