He May Never Walk Again
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Even the most promising future can change drastically by a life-threatening event. A healthy individual may require around-the-clock care and supervision after an accident. Families may need to seek government benefits for long-term health and special needs to avoid financial depletion and personal exhaustion. Business succession and career planning for parents and children may take unexpected turns as families cope with illness and recovery.
The close-knit Thorne family awaited each Thanksgiving with great anticipation, and this year was especially elaborate for the parents and their three children. The extended family had many milestones to celebrate along with their grandparents, Aunt Pamela, and her family. Their oldest son Andrew, 22-years old, and daughter Michelle drove home from college on Wednesday, joined younger sister Isabella, and everyone pitched in for the Thanksgiving feast. It was nearly Grandpa Newton Thorne’s 75th birthday and the 50th wedding celebration of Newton and his wife, Barbara. Isabella was in her high school senior year. The Thorne parents, Philip and Janet, were about to be empty nesters. The family all felt especially warm and close and had a beautiful celebration with much to be thankful for.
The day after Thanksgiving was traditionally a big shopping event for Janet, Pamela, Michelle, and Isabella. They planned to leave early for the nearest mall. Andrew, an avid cyclist, cross-country athlete, and engineering student, had brought his bicycle with him. He had not had a chance to ride in the last couple of weeks and planned a 45-minute ride in the morning before the other family members awoke. He hoped to spend time later with his girlfriend Jill and her family. Andrew left a note by the kitchen telephone for his father, Phil, saying that he was out on his bicycle and would return in one hour. It was 6:30 a.m.
The phone rang around 7:30 AM. It was still a little dark outside, and everyone was slowly getting ready to start the day. Phil was still upstairs and answered. It was the Bloomfield Hills police. There was an accident. A bicyclist had collided with a deer on nearby Franklin Road at Maple Road and had been rushed to the Beaumont Royal Oak hospital. Philip froze momentarily and felt light-headed. He sat down, took a deep breath, and yelled for Janet and Isabella. They were all getting ready to leave for the mall. He tried to explain about the accident, but he could barely speak.
“We need to go to the hospital,” he said, shaken.
The family waited in the waiting room for hours before the doctors met the family. The emergency medicine physician, the neurologist, and an internist first met with them. The news was not good. Andrew had a catastrophic injury to his spinal cord. His helmet had protected his head, but the impact of his fall had fractured his C5 vertebrae and had caused an open injury to his spinal cord in the neck region. Everybody was in shock. What did this mean? Phil felt numb, and Janet’s heart was sinking. Both Michelle and Isabella held their parents’ hands as they prepared to hear details. Jill was quiet but nervous. Andrew was in surgery to remove a bone fragment and replace a portion of the fractured vertebrae. His breathing was labored due to complications in his pulmonary functions.
Then came the worst news: The doctors said that they could not tell if Andrew would walk again. He would most likely be in the hospital for weeks. Phil felt faint; Janet suppressed her sobs and tried to remain strong.
Andrew was on mechanical ventilations while repeated CAT scans and MRIs were performed to assess the damage caused by the spinal cord injury. He lost sensation on both sides of his lower half of the body as well as in his wrists and hands. His pain was monitored, and a team of orthopedic surgeons, neurologists, pulmonary specialists, internists, psychiatrists, and rehabilitation specialists were in and out of his unit. The Thorne family members took turns staying in the hospital around the clock during the weeks Andrew was in the intensive care unit and later in a regular room recovering and awaiting news of his future.
After 12 weeks, his recovery, future, and quality of life remained uncertain. He left the hospital and was transferred to a rehabilitation facility for further physical and occupational therapy. He was paraplegic and had loss of function in the legs and lower body. His pain was manageable and his breathing improved.
It was difficult to know Andrew’s feelings and reaction in the beginning. He was prescribed extensive medication, and it was difficult to talk to him. Sadness and anger started to surface as the reality began to become clearer. He tried to conceal his feelings, but his frustration was obvious. The doctors wanted him to start seeing a psychiatrist right away, and Andrew agreed. He was diligent in his rehabilitation and gradually improved his wrist and hand movements but not his legs. He hated to be incontinent and wear diapers. He was strong but was also human. As a child, he had disliked when his sisters cried over petty arguments or other small matters, and he always maintained that only weak people cry. He was not weak and did not want to shed tears, but he only saw darkness in his future. During one family visit to the rehab facility, he broke down and said he wished he had a head injury and did not have his mind anymore; he just wanted to die. It was unbearable to see him suffer bodily and emotionally. His parents and family had no words to console him.
Every family member grieved in their own way and adjusted their routines and schedules. After the accident, Michelle came home from college in East Lansing every weekend. His girlfriend Jill came most weekends as well. She and Andrew had unspoken words, and they were both hurting. Andrew’s best friend Stephen was steadfast and strong for all of them. Stephen had met Andrew in their freshmen year in high school, and they were like brothers. He had become more like a son to the Thorne family and was more important than ever as they all looked to him for encouragement. He was a constant source of support and did not let them down.
Philip and Janet had always felt blessed with their three children. Andrew was their oldest, followed by Michelle, two years younger, and Isabella, four years younger than Andrew. Janet played a major role in raising them while Philip grew his thriving family business, Thorne Plastics Design, Inc. Yet both parents were involved in raising their family. Andrew showed great athletic ability early on, with a passion for cycling. He also maintained good grades in school and excelled in math and science. Michelle was outgoing, and even as a child she made friends easily. She loved languages and was always well organized; she could not stand messy things from when she was a child with her toys to her books and closet as a teenager. Isabella, the baby of the family, kept her family laughing with her ongoing jokes and cheerful personality. She was a talented debater and participated in forensics at school. Janet disciplined them with a firm and yet loving hand and made sure they all focused and excelled in academics and pursued other interests to be well-rounded.
As Thorne Plastics Design prospered, Philip and Janet’s personal wealth grew as well. The family moved to a larger home in Franklin, a northwest suburb of Detroit, when Andrew began high school. They also bought a home in Sarasota, Florida, for winter retreats. Their Franklin home was within the Birmingham School District and offered Andrew the sports opportunities he excelled in. He was a distance runner and part of the cross-country team. He trained hard every day with great discipline and made it to the varsity team, hoping to run in college. As part of his fitness training, he also swam regularly. His best sport activity, however, was cycling. He found cycling relaxing and yet invigorating. He dreamed of participating in a Grand Tour in the future.
Andrew and Stephen shared the same interest in cross country and were part of the varsity team. They were buddies in their daily training and often ended up in each other’s homes to study together. In their junior and senior years, they had similar advanced placement courses in physics and math. They both planned to study engineering and agreed to enter the same college.
Michelle was a freshman when Andrew and Stephen were juniors in high school. She idolized her brother and secretly admired Stephen. She was absolutely thrilled when Stephen asked her to the junior prom. Michelle introduced her friend Jill to Andrew and suggested he ask her to the prom. This was the beginning of a long-term friendship for them.
Andrew and Stephen both graduated with high grade-point averages and ACT scores. They entered Michigan State University in the mechanical engineering program. They continued running for the cross-country team. Andrew cycled whenever he could and as much as he could. He was proud of his new Enigma Elite Road racing bike his parents had given him as a graduation gift. The pressure of the studies along with keeping up with the cross-country training was getting harder and did not leave enough time for cycling. They saw Michelle and Jill occasionally but remained great friends. Michelle and Jill were freshmen at Michigan State University at the time Andrew and Stephen were in their junior year.
The summer before the end of his sophomore year Philip and Andrew had a serious conversation about his future career options. Philip was pleased with his son’s choice of career path in engineering and hoped for Andrew to be part of the family business. He felt, however, that Andrew should have summer internships in the engineering industry and then work for a large company just as he had done at Chrysler. Andrew respected his father’s opinion and admired him for his business acumen and success he had achieved. Interestingly, Stephen approached Philip to see if he could intern at Thorne Plastics the following summer. The Thorne family had become very fond of Stephen over the years. He was not only Andrew’s best friend but was now dating their daughter, Michelle. Andrew interned at Johnson Controls, a global company manufacturing automotive parts, the summer before his junior year and was invited to return the following year.
Andrew and Jill’s friendship blossomed and they were together every minute they could. Jill was studying international relations at the James Madison College and was considering law school after graduation. They were both serious about their education and future careers. Jill enjoyed running for pleasure and exercise, and they often ran together.
Andrew, Jill, Stephen, and Michelle wanted to make the summer of 1998 memorable. Before their internship and before the school began, they took a two-week trip to the national parks through Yellowstone and Grand Teton. They had two weeks of fun, love, excitement, and hope for the future. Both couples felt that their relationship was meant to be permanent.
As Andrew and Stephen’s senior year started, they began to be buried in academic pressure. They knew that soon they needed to apply for jobs and seriously plan their futures. Andrew wondered if he should accept a job at Johnson Controls if it was offered. He had interned there two summers and was well liked. Stephen was hoping to get a job at Robert Bosch.
After the accident, Stephen drove home every evening from Michigan State in East Lansing for weeks until Andrew was stable. He spent hours every weekend at the hospital and later at the rehab facility. They were a semester away from graduating, and Stephen wanted to postpone his graduation until Andrew could graduate with him. They had done everything together since they first met in their freshman year in high school. He did not want to graduate alone. Andrew talked him out of it and promised him that he would not be too far behind, that he would finish his engineering degree somehow. Isabella chose to live at home and attend Wayne State University instead of attending Michigan State where both her siblings attended. She wanted to help Janet care for Andrew as much as possible once Andrew came home.
Philip had other challenges. The business had to be managed. Larry Huff and Frank Barton, his two key people, were managing the business as best as possible, but he needed to get back to work. Phil was also thinking about Andrew’s future care, their ability to care for him at home, the cost of the medical treatment, and the care covered by insurance. Janet could not care for Andrew around the clock. They were advised to apply for SSI and Medicaid, but more importantly for a Medicaid waiver for home health care. Phil was aware that the Medicaid waiver program would take a long time to be approved. They could pay for Andrew’s care for a while, but although they were comfortable financially, they could not pay for Andrew’s around-the-clock care indefinitely.
Andrew qualified for a Medicaid waiver almost 15 months after his accident, and it was a huge relief. Andrew’s becoming eligible for Medicaid made Philip and Janet realize that they needed to plan for Andrew’s future differently based on laws related to special needs planning. It broke their hearts to think that Andrew would be on the welfare program instead of becoming a successful engineer. They did their estate planning soon after that and created their own revocable trusts to hold all their estate. They also created a separate stand-alone discretionary (special needs) trust for Andrew. They chose to leave 40% of their estate for Andrew’s trust and 30% each to their two daughters. Andrew’s trust assets were designed to supplement his government benefits and pay for things that were not covered by the government benefits. They asked Philip’s sister Pam to be the trustee until Michelle and Isabella were at least 30-years old. Their legal plan was revocable as Philip and Janet wanted to remain flexible and be able to make changes when it became necessary.
Philip’s business was an important component of the family estate, and Andrew’s accident created a challenge and confusion in Philip’s mind about his estate and business planning. Although Phil and Janet completed their basic estate planning to protect Andrew’s government benefits in the event of their untimely death, they knew their plan would need to be adjusted in the future.
The company was started by Philip’s father, Newton Thorne, in 1960, when Phillip was 10. The company went through many changes and transformations over the years and survived several economic ups and downs. Newton was a tool designer and started his own company after working for General Motors for several years. Phil worked at the shop after school a few days a week and in summer during high school. He was greatly influenced by his dad’s work ethics and love for design and manufacturing. He had a keen mind and was drawn to engineering. He graduated in mechanical and manufacturing engineering from Lawrence Tech and worked at Chrysler for three years before joining the family business full time at age 25. He developed many contacts and gained valuable experience during his few years at Chrysler.
Philip was also a visionary from a very young age. He introduced to the company the manufacture of custom injection-molds for the automotive, medical-devices, and residential industries. The name of the company changed from Thorne Tool Industry to Thorne Plastic Design, Inc., in 1977. The company initially focused on low-volume projects with faster turnarounds and gradually developed the capacity for larger projects. Over the years, the company gained respect in the industry as a small but dependable and trustworthy manufacturer. The company continued to grow with both father and son working side by side with several key people in the company. They also addressed their business plans for Philip to succeed Newton when the time was right, getting the proper buy-sell agreements and funding the agreements with life insurance. Newton was proud of his son’s leadership skills and how far they had come. When Philip turned 45, Newton handed over leadership of the company to his son and decided to retire. Philip bought out Newton’s interest in the business over ten years and used the profit from the company to do so. Philip also hoped that someday the business would have his children playing key roles. Philip continued to expand his business and had customers in the United States and Canada. Rockberg Engineering Company was one of their long-term customers.
Stephen accepted a job at Robert Bosch after graduation and continued to visit Andrew regularly. A year after the accident – when Andrew had stabilized in his routine including therapy and doctors’ visits – Stephen insisted that he complete his last semester and get his engineering degree. The year had taken a physical and emotional toll on the entire family. It had really impacted the grandparents. This shock at their stage in life had broken their spirits. Phil tried to focus on business matters, but Andrew was always at the back of his mind. Michelle and Isabella managed a brave front but hurt for their brother and grieved over the loss of who their brother was. Janet was the backbone of the family. She shed many silent tears but remained the anchor of the family and a rock for Andrew to lean on. Stephen was the other rock for Andrew and for the family. Stephen arranged for Andrew to study for the remaining credits at home online. Andrew could not focus well and was tired easily. Stephen was patient and insistent. He continued to encourage Andrew until he graduated a year later, two years after the accident.
Once Andrew earned his degree it became important for Philip that he give Andrew an opportunity to put his education to work at Thorne Plastics Design. He was qualified, but it would be difficult for him to work in a traditional employment setting. He needed to work in a friendly and less regimented environment. He needed help with toileting, and although his wrist and hand movements had improved with routine therapy, he needed assistance in feeding. At home, a caregiver from the Community Mental Health provider arrived at 7:30 a.m. to help him with his morning routine. Philip suggested Andrew start working a few hours at a time and learn the business structure, the manufacturing process, the roles and responsibilities of the 75 employees, as well as the sales, revenue, and profitability aspect of the company. As Andrew became familiar with the work pattern, Philip suggested he focus on the aspect of operations he most enjoyed. Philip and Janet had purchased a van with a lift for Andrew, and his caregiver drove him to work and back home. He started with two or three hours of work per day and gradually increased to a manageable schedule.
Andrew’s career aspirations were further complicated by the income limitations imposed by the government programs that provided him with the personal care he needed to dress, bathe, use the bathroom, and move around. If Andrew’s income exceeded the guidelines for these programs, he would lose his eligibility. Andrew’s professional assistance was valuable but difficult to compensate, since he couldn’t work a full-time schedule and sometimes had medical issues that interfered with his work. Philip explored options under the governmental benefit programs where certain employment-related expenses could be offset from Andrew’s income.
Jill and Michelle graduated before Andrew earned his degree. Michelle had majored in business and Jill was accepted in several law schools. Michelle and Stephen were a couple, and the family tragedy had brought them even closer. Jill remained very committed to Andrew, but Andrew accepted that there was no future for them together. Jill believed Andrew was brave and competent, but Andrew knew he was physically disabled and felt he could never be the man Jill deserved. It was the saddest day for both of them when Andrew ended their relationship and urged her to move on. Jill entered University of Chicago Law School that fall. Andrew battled deep depression, anger, frustration, and sadness as he faced a bleak future.
What is the purpose of an intellectual mind caged in a worthless body? It would take a long time before he could believe that his mind was intact and a gift and needed to be used.
Andrew gradually became an important presence at Thorne Plastics Design. He used his wheelchair to move around the plant carefully and easily. He was involved in design of the products as well as strategic planning and supervision with Jim Huff. He still tired easily and needed frequent breaks. He still suffered from spasticity, a urinary tract infection from time to time, and had muscle and joint pains. He was on several medications including anti-depressants. The care-giving team from the Community Mental Health provider worked well with his challenges and schedules. They helped him change and dress in the morning, dropped him at the plant and picked him up in four hours to take him back. They helped him keep his room in his parent’s house clean and took him to all his medical appointments. Janet supervised Andrew’s caregiving and accompanied Andrew and his caregiver to most medical meetings. Philip and Janet were thankful for the waiver program. They could not possibly manage to care for Andrew without that.
After working for a steady two years, Andrew asked his parents if he could have his own residence. Philip and Janet were surprised but agreed. They wanted to reward Andrew’s contributions and commitment, so they purchased a small ranch in Farmington Hills between their home in Franklin and their plant in Wixom. Philip and Janet owned the home, and it would be deeded to Andrew’s special needs trust at their demise. They arranged with Community Mental Health to increase the hours they needed for staffing after Andrew returned home and for the night. Andrew would always need care and supervision, and the financial value of the benefits received from the government could never be replaced by any assets they could leave for Andrew.
Thorne Plastics Design expanded steadily. Philip felt the need to add another engineer, an operations person, and a human resource person. He discussed this with Andrew, Larry, and Frank. It was Andrew who suggested Phil approach Stephen and Michelle. They were engaged to be married soon, and the Thorne family could not find more appropriate people. Stephen was hesitant at first. Andrew convinced him that it would be good for his career and a big help to him and his family. Stephen became a member of the Thorne family after he and Michelle married in the summer of 2005. Michelle, Andrew, Stephen, Larry, and Frank handled the key aspect of the Thorne Plastics Design under Phil’s leadership.
As years went by, Philip and Janet began realizing it was time for them to begin their retirement and business succession plan. Philip knew he was fortunate to have succeeded in his business, but what he was thankful for was having Janet by his side as a true companion since they married 35 years ago. He was approaching his 60th birthday and wanted to make important decisions regarding the continuity of Thorne Plastic Design Inc. Every time he thought about it, though, a stabbing pain went through his heart, and he had a sinking feeling. His father had helped him mold his career and destiny. Would he be able to do the same for Andrew? What about Michelle and Stephen, who were now key components of Thorne Plastics Design?
A new development had occurred over the last few months. Phil, his accountant and attorney had been in conversations with the Toronto-based Rockberg Engineering Company for the last few months about Rockberg’s interest in acquiring the family business. A meeting was arranged for Phil and Janet to meet the executives of Rockberg Engineering Company.
The years flashed back in Philip’s mind as Janet and he prepared for their meeting with Rockberg representatives. Philip had discussed Rockberg’s proposal – to buy out and have Thorne Plastics Design be a subsidiary of Rockberg – in great detail with his children. He also consulted Newton, who was still very sharp at 85, despite his failing health. They were offered an excellent valuation for the company and wanted some of the key people to stay on. Philip felt honored and gave it a lot of thought. He knew what his decision was going to be, and Janet was in complete agreement.
The Rockberg Engineering Company CEO was surprised when Philip declined the offer to merge. Philip explained that Thorne Plastics Design was not just a family business; the company leaders also believed in taking care of the family. It was unanimously decided by the family members that it was unlikely that Andrew would have been able to continue his unique role in the business despite the Rockberg CEO’s assurance he could. Limiting Andrew’s work and compensation in a manner that preserved his benefit eligibility was simply too complex. Rockberg was a big company and likely could not make the constant adjustments and accommodations that Andrew would need. Philip and Janet would have to work differently to protect his future. The family recognized that they were turning down a tremendous opportunity, and Michelle, Stephen, and Philip would have all done well with Rockberg. But they also concluded that their journey could not continue without Andrew.
Philip marked his 60th birthday in 2010 with a quiet celebration with his family. Grandpa Newton turned 85 the same year. Philip recalled that his father began his successions plan at age 60, and he was anxious to put his own plan in place. Phil was challenged by several personal and business planning objectives and the complex tax and Medicaid laws. My firm became involved in their financial planning and Andrew’s planning soon after Andrew’s accident in 1998. The family now needed a team approach of other professionals to put all the components together and plan for Andrew’s future.
The same law firm that did the Thorne family estate planning introduced us to their tax and business-succession planning attorney, who was also knowledgeable of special needs planning. Philip’s CPA also was a certified business valuation expert, an added value. As a team, we assessed the Thorne family estate. This included the value of Thorne Plastics Design, Philip and Janet’s financial needs in retirement, Janet’s income needs as a survivor, and their thoughts on dividing the estate between their children, other family members, and charities. It also was important to consider Newton and Barbara’s estate. Phil and his sister Pamela were heirs to their parent’s assets, but the grandparents also wanted to leave assets to their grandchildren, including Andrew.
Philip and Janet wanted to treat their three children equally. The youngest Isabella was not part of the family business. Bella was finishing her doctorate in psychology and married to Ryan, an IT specialist. Phil and Janet had good investments in Phil’s retirement account as well as in their trusts. They owned the building housing Thorne Plastics Design and received rent from the company. These along with Phil’s life insurance would be adequate to provide financial security for Janet at Phil’s passing. They both had long-term care insurance as well. They continued to make their own calculations of the intrinsic value Andrew added to the company and set that aside in a separate account to be “transferred on death” to Andrew’s Special Needs Trust.
Phil was insistent upon using simple planning strategies for his business succession. He wanted to include Larry Huff and Frank Burton, the key people in his plan. They had remained by his side for many years through difficult and challenging times. They knew his children since they were young and understood Phil’s sentiments about his business and anguish over Andrew’s situation. He did not want to include Isabella in his business succession plan and wanted to consider Michelle and Stephen as one unit. Isabella’s inheritance would be a third of the estate but be distributed from assets outside of the family business. Phil and the planning team’s greatest challenge was including Andrew in the business succession plan and making him a stockholder of the company. Phil and Janet also gave a great deal of thought about whether Stephen should be a stockholder. They loved him, and he had done more for their family than they could ever ask. And yet they wondered what would happen if Michelle and Stephen divorced.
The business valuation along with the other assets including investments, retirement plans, life insurance, and possible inheritance from Newton and Barbara amounted to a size that could be subject to estate taxes at both Phil and Janet’s deaths. Although there wouldn’t be any estate taxes in 2010, the laws were about to change, and they hoped to avoid the taxes if the new law increased the exemption allowed per person for estate taxes.
Many tax-saving strategies were discussed such as creating an irrevocable life insurance trust, intentionally defective irrevocable trust, and a family limited partnership. Phil reviewed them all carefully but decided against a strategy that would be irrevocable and could not be changed. Their lives had changed in a fraction of a second when Andrew was in the accident, and it was important that their plans be flexible enough to adjust with changes in circumstances.
Philip and his CPA agreed that the profits of the company each year could be given as a bonus to Larry, Frank, Michelle, and Stephen to buy the corporate stock of Thorne Plastics Design each year for 10 years or until they owned the amount Phil had planned. Phil and Janet also decided to include Stephen in the stock purchase plan and hope that their daughter and son-in-law would stay happily married. Phil decided that Larry and Frank should each own five percent of the stock, and Michelle and Stephen should own twenty-two-and-a-half percent each. The remaining forty-five percent of the corporation stock would go to Andrew, the greatest challenge for the planning team.
Phil and Janet often questioned if they could replace Andrew’s Medicaid-provided caregiving and all other benefits he received. It would be easier to plan their estate and business succession if Medicaid was not an issue. They wondered if Andrew’s inheritance, Social Security benefits, and income he could earn would not interfere with those benefits and be sufficient to take care of him. They concluded the government benefit was irreplaceable and too risky to give up. It also meant that Andrew could not be treated the same as their other children. He could not own or earn more than what the Medicaid eligibility rules allowed. He could not own any part of the Thorne Plastics Design directly. Phil and Janet were also aware of the budget constraints of the government programs and the future governmental funding of programs that would provide for Andrew. It was difficult to predict his life expectancy, aging process, and future needs. The team advised they should assume a normal life expectancy for Andrew and to fund his special needs trust supplement enough to cover what the government benefits did not. The Thorne Plastics Design stock would need to be owned by Andrew’s special needs trust.
Phil could not plan on providing Andrew a bonus to buy company stock every year as he did the others. This would be treated as income, reducing or eliminating Andrew’s eligibility for the essential benefits that allowed him to live independently and work. The planning team considered the pros and cons of gifting the company stocks to Andrew’s special needs trust each year until the trust owned forty-five percent of the company.
They also considered sticking with the original plan of Phil continuing to own 45% of the stock, passing it on to Janet, and then to Andrew’s special needs trust . They wondered how Andrew would feel and who would be the ultimate trustee of Andrew’s trust. Michelle and Stephen succeeded by Isabella seemed the appropriate choice. But that would make Michelle and Stephen combined owners of 45% of the company, and trustee of another 45%. They could become majority stockholders, and the parents wondered if that was safe for Andrew.
The special needs trustee could not name Andrew as a trustee. However, Andrew could act as “investment advisor” for the trust. In this role, he could direct the trustee on the management of the business assets held in the trust as long as he had no authority to make distributions on his own behalf. He could sit on the board of directors, continue to lead discussions regarding the company’s strategic direction, and continue to contribute both his technical expertise and valuable personal insights. Phil appreciated the fact that this solution gave Andrew credit for the role he continued to play in the productivity of the company and allayed the concerns about interfering with his income-tested governmental benefits. As the company grew and prospered, the profits directed to Andrew’s special needs trust could be used for Andrew’s benefit and to enhance his independent and quality of life.
Ultimately, Phil chose to gift company stock to Andrew’s special needs trust each year until the trust owned 45% of the company. The gift would become irrevocable at Phil’s death. Phil was the initial trustee of Andrew’s revocable special needs trust. Since this was a revocable trust, it was not considered to be a completed gift, and Phil could overrule Andrew, but Andrew saw this gesture as evidence of Phil’s intent to include him in his planning in a tangible way and reward him for his valuable contribution to the company.
It took almost 18 months to complete their business succession and estate plan. Philip and Janet were pleased and relieved to have a well thought out plan for their family that was also flexible and could be changed if necessary. The estate exemption was increased by Congress, and further changes were anticipated.
Newton, Phil’s father, mentor and founder of Thorne Plastics design, passed away in 2013 at the age of 88. He remained Phil’s life counselor until his death. Andrew’s accident hit him hard, he loved his grandson and was his biggest fan. Newton called Andrew daily, chatting about all that was happening in their lives. Andrew always felt secure in expressing his insecurities and fears to his grandpa. Andrew lost his best friend and confidant when Newton died. Barbara, Philip’s mother, died 18 months later after a short nursing home stay. Their assets were then divided between Phil and his sister, then their five grandchildren. Andrew’s share was given to Philip to be added to the account Philip and Janet were maintaining for Andrew’s special needs trust.
Andrew no longer questions his fate. He is grateful for his family business and the opportunity to work and have a routine in his life. He meets with a support group of accident survivors from time to time. Grandpa Newton had suggested many years ago that he speak publicly about his experience as an accident survivor with a spinal cord injury. He started speaking with his support group and now speaks periodically at various other groups such as the Rotary Club, Veteran’s Groups, and other support groups. He looks forward to these opportunities.
His family remains devoted to him but also have their own lives. Stephen is his loyal buddy and visits every weekend. His caregivers change from time to time, but they are his companions. Both his sisters have their own children and careers to manage. His parents are aging and now spend their winters in Florida. It is difficult for Andrew to travel, and life is lonely. He still experiences pain and fights sadness and depression despite psychiatric counseling and medications. He has great days and not so good days. He wants to be stronger and have purpose in life. His efforts will be ongoing and lifelong.
Insights from the Thorne family
- Unexpected accidents can mean changes in every aspect of financial planning and anticipated job security. Families can apply for appropriate government benefits and review financial aid considerations carefully.
- Accidents can create both permanent physical and mental disability, changing the life of the injured individual as well as of the family. The psychological impact of a possibly lost future is unmeasurable.
- Business succession plans combined with special needs planning create added levels of complexity and require professionals from various disciplines to work together. The value of the government programs for most people as seen in Andrew’s case is irreplaceable, and the planning has to be designed to protect the eligibility of the benefits.
- Keeping the plan flexible and revocable is often important for many families and outweighs the importance of tax savings. If tax savings plans are more important, more flexible language in the trust documents may be necessary as well as giving certain powers to a Trust Protector. That is another individual appointed by the trust creator to make adjustments as necessary.
Minoti Rajput, CFP, ChSNC, is the founder and principal wealth advisor of Secure Planning Strategies. She has been working with families with children of special needs for over 30 years and is a frequent speaker on various topics related to special needs planning. She is also the author of Beyond a Parent’s Love.