Special Needs Trusts: an Interview With Brad Hallock of McAlpin Foster Advisors

As a parent of a special needs child, how do you best take care of the child’s financial needs? Brad Hallock, a partner at McAlpin Foster Advisors, works with parents to answer this question.

McAlpin Foster Advisors is a financial planning service here in Colorado Springs, and Brad Hallock works with families. Although Brad helps a variety of families, he most enjoys the planning required for a child with special needs, as it is the most challenging. Brad has worked in this field for 17 years, but it wasn’t until he attended a baseball game to support one of his wife’s students with special needs that Brad made the connection. He realized that people within the disability community needed access to understanding and setting up special needs trusts.

A trust is like a bottle of water: money goes in and comes out, and there are instructions on the label. Families use trusts in order to ensure that the quality of life is maintained for a child or adult with special needs while preserving other assistance that the person receives, such as Medicaid benefits. Brad reports that with a good financial planner, the quality of life can also improve. Why is this so important? For example, if a well-meaning family member leaves a child with a disability an inheritance—even if only $10,000—this could result in the loss of benefits for the child, unless that money is placed in a safe vehicle: a trust.

Brad believes that even though not all families, even with children with disabilities, need a trust, each family should meet with a financial planner at least once in order to decide what that family needs. In some instances, a will is sufficient. Brad says that if you own a home, or retirement assets, you may need a trust. Trusts can be funded in different ways, such as with your retirement account, or a life insurance policy.

Most trusts are simple and only take a short period to set up. Special needs trusts can be much more complex and take years to completely execute. Most families only have to worry about their children for a relatively short period, where a family of a child with a disability has to consider a life-time of care. Brad reports that it is wisest to have a trust in place before a child with a disability turns 14.

Brad describes the trust process. The first step is to sit with the financial planner so that he can get to know your family. Each situation is unique, and each trust will be different depending on the individual’s needs, family desires, and the amount of finances that a family has. Trusts only have to be as complex as necessary. Brad says that anyone can have a trust, and he works with all types of various situations from the rich to the poor.

A trust can be an instruction manual for your child with special needs, expressing exactly how you would like the the child to be raised in the worst-case scenario that you are not present to raise the child yourself. These are hard questions. Who will step in if you pass? Will a person who cares for your child follow your religious or political preferences? A trust can make sure of that. It can also provide for the beneficiary’s hobbies and interests as well as needs.

There are different kinds of trusts. A first-person trust is used mostly in cases where an adult has become disabled. These are funded directly to the person with a disability, unlike a third-person trust or supplemental trust, where a trustee executes the funds. The trustee can be a family member, friend, or professional. Also, you can set up the trust to be in place immediately, or only after the death of the parents of a child with special needs.

Because the laws are always changing, and there are also tax issues, Brad always works with an attorney that he trusts. He says that he has a unique and close relationship with his clients, as he takes a holistic approach to life-time financial planning. Setting up a special needs trust may be doing what is best for your child with special needs.

McAlpin Foster Advisors 422 E. Vermijo Avenue, Suite 310
Colorado Springs, CO 80903
Phone: 719-219-6334
Fax: 719-218-9130
info@mfaplan.com