“Trust Matters: Setting Up a Special Needs Trust for Your Child’s Future” with John Gallia.

Episode Summary:

In this episode of ‘Forever Home for Our Kids with Disabilities’, Valerie is joined for the second time by John Gallia from Gallia Wealth Management for a powerful and practical conversation about special needs trusts - Henson Trust in Canada - and how families can begin planning NOW to secure their child’s financial future.

John is a seasoned financial advisor and the founder of Gallia wealth management group, LLC, an independent financial planning practice that he established in 2015. John gained a financial planner designation in 2010. And he obtained his chartered special needs consultant designation in 2024. This specialization allows him to provide dedicated guidance to families navigating special needs planning across the US. John is the father of two boys seven and almost five and his eldest is on the spectrum. 

They unpack the role of a trustee, why not just anyone should fill that position, and the key responsibilities involved. John offers insight into choosing between an individual trustee versus a corporate trustee and stresses the importance of starting early - even if it's one small step at a time.

What You’ll Learn in This Episode:

- What a Special Needs Trust is (Henson Trust in Canada) and why it matters

- The critical role of a trustee and how to choose the right one

- Key qualities to look for in a trustee: values, financial understanding, longevity, and trustworthiness

- The difference between an individual trustee and a corporate trustee

- Why it's important to start creating a special needs trust now - not later

- Practical advice on how to get started, even when life already feels overwhelming

- Encouragement and validation for families navigating life with a child with disabilities

Memorable Quotes:

~  “You can't just pick anybody to be your child's trustee. This is a lifelong commitment.”

~  “The key is — don’t wait. Start now. Even one step forward a month will add up to peace of mind.”

~  “We can't have paralysis by analysis. Take one bite at a time, and it will come together.”

~  “Mental, physical, financial, and time — these are our four limited resources. Planning helps preserve them all.”

Final Encouragement from John:

You're not alone. Even when it feels like you're on an island, know there’s a network of families, professionals, and resources who understand and are here to help. Keep going, one step at a time.

Keep building your child’s future

Live with Intention – Embrace the Journey

If you found this episode helpful, please subscribe and leave a review! It helps other families like yours find support and guidance. Please help spread the word!

Connect with John Gallia:

https://galliawealthmanagement.com/

https://www.linkedin.com/in/john-j-gallia-jr-cfp%C2%AE-chsnc%C2%AE-55263734/

Connect with me:  

hello@hello.coachingwithvalerieanne.com 

Music Acknowledgement: Audio Coffee - Denys Kyshchuk

Editor: Scott Arbeau

Link for book: The S.H.I.N.E. Principle: The special needs mom's path to strength, hope and happiness by Valerie Arbeau

https://www.amazon.ca/dp/B0CW18ZXGX (Canada)

https://a.co/d/03hFdZI4 (United States)

Learn more about your host at:
https://coachingwithvalerieanne.com/

Transcript

So if they can't work in the future or can't work a job that's giving them enough income, then they're basically not going to qualify for benefits. So the priority is get that stuff established now. And then in the best case scenario, you don't even need to use it.

Well, hello, I am so glad that you're here. I'm your host Valerie, mum to two with disabilities, one visible and one invisible. I'm thrilled to welcome back John Gallia, who is a seasoned financial advisor and the founder of Gallia wealth management group, LLC, an independent financial planning practice that he established in 2015. John gained a financial planner designation in 2010. And he obtained his chartered special needs consultant designation in 2024. This specialization allows him to provide dedicated guidance to families navigating special needs planning across the US. John is the father of two boys seven and almost five and his eldest is on the spectrum. 

In our previous conversation, John shared his journey as a special needs dad, and the importance of our relationships with our loved ones. John counseled that it is never too early to come up with a financial plan for our children. We talked about Trusts, government programs, and we even shared stories of what it was like to actually start the process of getting assistance for our children. We both shared about meeting a need in our communities. John organized an Easter bunny event with autism in mind. And I shared about a camp for children using a communication device my husband and I co-founded. We wrapped up with John sharing about the importance of working with professionals who have education in financial planning for persons with disabilities. Now I had to bring John back so we could delve deeper, and into the financial landscape for our children with disabilities. So welcome back John!

Hey, thanks for having me Valerie. 

You're so very welcome. So John, because I'm at the stage of life that I'm in, I'm curious about how do we balance planning for retirement and supplementing a child's living expenses for the remainder of their life?

That's a wonderful question. And, as a financial planner, and as one that helps families with special needs financial planning, it's one I see every time that I talk with a parent of a special needs child.

The key is that we can't neglect either retirement or special needs planning. Because number one, there are costs in retirement, care for us, we want to live a healthy life, we want to be there for our children for as long as possible. So there's an element of balance that we need, we need to contribute to our 401k accounts, we need to contribute to our IRAs, we need to make sure that our savings, our insurance is up to date. And we also need to begin planning as well for our child's needs. Now, a lot of special needs financial planning doesn't necessarily cost an arm and a leg. It's a matter of making sure that our children have the government programs in place, have the services in place. And that doesn't necessarily cost money, it costs time.

But that's the first step. And then it's a matter of setting up accounts for later in life, making sure that those are in place that protect our children from possible supplemental security income, payback in the form of Medicare. So we need to put those things in place. And again, it doesn't necessarily take a lot of money, those accounts can be funded in the future. But we need to make sure that they're in place sooner rather than later.

Okay, thank you so much for sharing that, John. So in our previous conversation, we touched on what a special needs trust is, can you remind us of what that is? And then how does special needs trusts benefit individuals with disabilities?

Their special needs trusts are a great tool for leaving assets later in life to

 our children that are receiving supplemental security income, or the key is may be eligible to receive it in the future. A special needs trust will help protect their benefits from that and medicaid benefits as well. So, if a person has a

 lot of money that they may inherit, if that money goes to that special needs child in the future without it first going to a special needs trust and being distributed by a trustee, they may not have that kind of security income that they were receiving before. And supplemental security income currently is $967 per month. Now, we know that that's not a ton of money to live off of, right? So if we're a parent, and we have the means to help our children, we need to make sure that we're putting plans in place to fund their needs for the future.

Right. And so a special needs trust then is a special needs trust then is a special estate planning document tool, that allows parents to put the money in, so that it's available for their child later,so when they have passed away. So I'm assuming a person has to pass away that set this up to allow it to then be distributed to the child.

Am I correct? 

Not necessarily. Now, I will tell you that the norm for funding a special needs trust is through insurance on the parent or the guardian or the grandparent that wants to give the child funds.

Now you can set it up through an investment account and contribute that way. Now I will say the whole goal is to have a substantial amount of money in that special needs trust to fund longevity. So we're talking a couple hundred thousand dollars up to a million dollars. The most

common way people fund that, is through life insurance.

So, we don't know when we're going to pass. Hopefully it's down the road. But if we have a special needs child that may need funding five years from now, or 30 years from now after we're passed, we need to make sure those funds are in there. So typically what a guardian will do or caretaker will get an insurance product or a life insurance policy on themselves. And when they pass that trust will be named as the beneficiary. Thus the funds go in there.

And the funds can be used for various things. It's actually easier to list the things that the funds can't be used for rather than the things that can be. And what it shouldn't be used for is groceries and rent or mortgage expenses. 

Okay.

The rest of the time that can be used for pretty much anything. We're talking about trips, vacations, caretaking services, therapies, buying TVs, household stuff. It can also be used to purchase a car. Now it can't be used to purchase the second car or the RV. We're talking about purchases that would help a person maintain their life. 

Right. 

Their lifestyle. 

Okay, well, thank you so much, John. So, I'd heard that you can have a first party special needs trust and a third party special needs trust. Now I'm just trying to figure out why you would need two different types. So can you explain that a little for us? 

Absolutely. So the first party special needs trust is used for somebody that has funds themselves. A special needs child or a special needs person that has funds themselves that they've earned. That would go to a first party special needs trust, right? It's not a gift or an inheritance from somebody else. Now the big stipulation between the first party and the third party, when the beneficiary of the special needs person passes, the funds that remain in the first party special needs trust are subject to medicaid payback. Okay. The third party special needs trust, the funds remaining would not be subject to Medicaid payback. You just name beneficiaries, thus it's spread out to those individuals. Now, typically funds from a first party special needs trust come in the way of a settlement, maybe due to an accident. Maybe this person was able to work a full time job and have significant savings before an event happened that caused them to become disabled.

That's basically the first party special needs trust. The third party, again, is somebody setting up a trust for that person and making contributions. In the first party, the special needs person is the grantor. In a third party, the grantor is someone else. 

Okay. So if I've had an accident and suffered a brain injury and need help, and I've had some money saved up, or I get an insurance payout that would go into a special needs trust, that's a first party because it's my money. 

Yes. 

Right. Okay. So for my child who was born with a disability, has cerebral palsy, my oldest, then I would put into a trust for my child, that would be third party. 

That's correct. And the big difference is basically Medicaid payback. 

Okay. Okay.

The first party special needs trust when it's set up is irrevocable.

The third party special needs trust is typically revocable, but once it is funded with any kind of money or assets, then it becomes irrevocable. 

Okay. I live in Canada and, in Canada, I'm understanding that our equivalent to a special needs trust is a Henson trust. And in Alberta, the province that I live in, we don't have to set it up with any money in it. So we can put money in later. In our case, what we're planning to do is have the money from the insurance, go into that trust. And then the house that my daughter lives in will be in the trust as well. Is that something that happens in the US too? 

Yes, typically about 90% of the time, that is how the third-party special needs trusts are funded. There are other vehicles, accounts that we'll go into on a later podcast that we've scheduled, a little plug there, that we'll talk about those other kind of accounts.

And that would be for ones that maybe aren't as significant as something that would deem

for special needs trust. But that's typically how it is, an insurance policy, a house, or any kind of other savings account that the person is going to inherit after guardians or parents pass, basically the beneficiary will be the Trust. So it really doesn't have to be funded right now.

A lot of times they're left in shells for quite a while. But again, it's good to have that shell. It's good to name those beneficiaries because Valerie, if something were to happen to you or I next

week, we would want to make sure that our kids are protected. 

Yes. 

Starting next week! We hope that nothing happens to us for years and years and years down the road. But the protection need, we need to plan for now. 

Absolutely, absolutely. So we can have the shell. So this is the third party special needs trust. We can set it up. We don't have to put anything in it right now. Things will go into it as we pass. And at our next episode, as you mentioned, we'll talk about other things that can go in. So, awesome. Thank you so much for clarifying that. 

So I hope audience that you have a better understanding of a special needs trust; two ways it can be funded; and the fact that we don't have to in the third party, if we're setting it up for a child, we don't have to put anything in it. We can set it up and it's ready to go.

And I'll add something to Valerie. Let's say our child is young, like my child on the autism spectrum, we don't know what the future holds.If my child doesn’t make an income or can't find a job to make an income, a substantially gainful activity, which currently is only about $1,620 is how much income you can bring in. And that's considered a substantially gainful activity that would limit the amount of supplemental income that you would get would limit the amount of Medicaid. So, I don't know, I hope my child can find a job that will pay

significantly more than that. And the special needs trust is never funded.

We could have a millionaire, we don't know if our child is young, what we might have in the future. So that account, worst case scenario, just goes unfunded perpetually and never gets used. But the issue that we have is something were to happen to a parent of a young child now, that child would inherit their money, basically not through a special needs trust.

So if they can't work in the future or can't work a job that's giving them enough income, then they're basically not going to qualify for benefits. So the priority is get that stuff established now. And then in the best case scenario, you don't even need to use it.

Right, right. Thank you for clarifying that. That's important information. And having this Henson Trust is something for us, we didn't even know about when Melody-Anne was young. So I'm just really wanting our audience to take this in, take notes, and really look into how you can get something established, get it set up so that as John said, best case scenario, you don't need it, but it's there if you do.

 All right. So John, are there minimum amounts that can be held in a special needs trust?

There's not really minimums. I would venture to say if there's anything less than $100,000 that you're wanting to give your child over time, there's probably better avenues or different kind of accounts that you can put that money in. Because whoever manages your account may have a minimum themselves. And we want to make sure that substantial money in there, is in that special needs trust, so it lasts time and it can be invested, right? So there's not really minimums, but I will say if we’re talking about life insurance, we want to make sure that life insurance proceeds because those are typically higher rates, the beneficiary is a special needs trust.

Right. So in other words, we don't want to leave our insurance, the beneficiary of our insurance, we don't want to leave that to the child. We want to leave it to the Trust. Because if it goes to the child, it can affect their benefits down the road. 

That's exactly it. And you really hit the nail on the head. We don't want to leave anything really to the child. We want to leave things to special needs trust, to ABLE accounts, to a pooled trust. What we're trying to do is protect their benefits. 

Right, right. Okay. So you mentioned pooled trust, what's that?

So a pooled trust is a special needs trust that is run by a nonprofit organization, so let's say

Grandma and Grandpa pass and they have 20 or $30,000 to leave to a special needs child. It doesn't necessarily need to be left to a special needs trust because there are costs in drafting a special needs trust, right? You have to hire an estate planning attorney. So the trust might cost depending on where you're at geographically $1,000, $1,500, $2,000. So if the money that you want to contribute, or somebody wants to contribute to the child isn't significant, there are these pooled trusts that basically take a lot of these different funds from other folks, they lump them into one sum of money, they're diversified, they're managed, and they're distributed to the child via these pooled asset trusts. 

Okay. Okay. Yeah, that's news to me that I've not heard of this before. So that is another option to be explored. Well, thank you so much, John, for helping us understand a little bit more about that.

I’m  kind of sensing the urgency. Parents, get this sorted. 

All right. So John, let's move to who is it that administers this trust. So I mentioned earlier that I recently learned that it's a Henson Trust here in Canada. And we realized that we needed to appoint a trustee for Melody-Anne's special needs trust or Henson Trust. And we didn't really know a whole lot about it. But we realized that it can't just be anybody. You can't appoint just anybody to be the trustee. So some of the criteria that we filtered our choices through included the person's values, their financial acumen, which is their ability and their understanding how to use financial information. Do they know our child? Are they trustworthy? Are they responsible? So those were some of the filters that we used when we went to pick our trustee. So can you share with us about the responsibilities of a trustee and knowing how this will guide us to who will be the most suitable person to take on this role?

That's a great question.

Being the trustee of a special needs trust is pretty in debt. Let's consider a family Trust, a revocable living trust. Someone passes away assets, accounts, basically filter through the Trust. The trustee basically distributes them according to the Trust. A year, a year and a half later, everything is distributed, taxes are paid, it gets closed. It's back to life as normal.

In a special needs trust, it's completely different because this will last for the remainder of the child's life. It could be 10, 15, 30, 40 years. So key in trying to find that person that you want to choose for the special needs trust or the trustee, you want to make sure, number one, they have longevity. Probably you don't want to pick somebody that's in their 70s or 80s if your child's in their 40s. Right. That's logical.

Somebody that's good with numbers and somebody that is going to take the time to learn how

to administer the special needs trust. So the special needs trust, what you want to do is you want to keep track of the expenses that you have and categorize it, either using Excel or right now you have QuickBooks.

Basically, those funds that are used to support that child, that's subject to a Medicaid audit. So you will have to prove that those funds are being distributed based on qualified expenses over time.

And the trustee will need to continuously provide that information to the government programs, will need to consider the needs of the child and make those decisions accordingly.

The other route folks can go with is, they can go with a corporate trustee. Okay, so the corporate trustee is basically you're hiring a financial institution to manage the assets within that special needs trust and distribute those. Now, what you probably will give up is, you know,

 if you have somebody that is a trustee, an individual, there's going to be less costs.

Right.

Right. If you have a corporate trustee, there's going to be some costs involved and it could be a percentage or so of the assets that make up that special needs trust. You also need to consider that this corporate trust doesn't necessarily know the child or know the person. They don't know the needs. So they're not going to have an emotional connection to the person, so to speak, which could be good, which could be bad based on the situation.

You have a tough decision to make, whether I go with the individual or whether I go with the corporate trustee. But I will tell you, that if you do go with the individual, you want to have that conversation with the individual. You want to make sure they are aware of their responsibilities. You want to make sure that they have a good network of folks that they feel comfortable reaching out to if they have questions. That includes a CPA that is well-diversified in special needs financial planning, an attorney that creates the documents, and also a financial advisor, preferably one that holds a chartered special needs consultant designation that can help you plan and can help you navigate the rules and the legislation of administering a special needs account, especially because they change all the time. So you're not really giving anybody a responsibility that they're really going to be excited about by choosing somebody to be an individual, by choosing them to be the trustee of a special needs trust. 

But there are some options depending on what you decide is the best choice. And it could be as simple as, all right, I have this individual, but I only have one individual that I think would be qualified to do this. If something happens to that individual, then the secondary trustee would be the corporate trustee. 

Right. Yeah. So I guess it's good to have the option, but I like how you brought out the age of the person that you're choosing, or at least considering to ask for the responsibility of being a trustee to the Trust, because that is important as well. Because if you're aging out, if you're choosing someone in your age range, they potentially will be aging out as well. So, you know, if you're able to find someone, not necessarily closer to the age, like my child's in their twenties. So potentially I should be looking at somebody in their thirties, forties. 

That's correct. And that kind of goes for financial planning in general, you know, it’s fine if you’re

older in the nineties or the eighties, if you want to go with a 70 year old financial planner, that's fine. But let’s look at it. We don't want to change people that have a big responsibility and are really helping us with tough decisions in our life. We don't want them to retire and then start forming that new relationship. So, it's really important to kind of match your time horizon as best as you can with the person that is helping you with your finances or your estate planning or your CPA. 

Okay. Thanks so much. 

John, who should we contact to draft that special needs trust?

Great question, Valerie. I would reach out to an estate planning attorney that has experience drafting special needs trust. I will tell you, it is important to find somebody that is geographically within the same location as you are as laws don't necessarily transcend state to state or province to province. So you want to make sure that that person is drafting for your needs in that area. You can go to the Special Needs Alliance. And there are some folks that you can look up and get some more information. You can contact your local ARC A.R.C. organization that might have some resources, and you can reach out to other groups within your area.

Chances are they probably have some good names, some good resources of folks you can utilize. 

Okay. So, when is the right time to establish a special needs trust?

I would venture to say again, it’s important because we don't know how much time we have here and we are wanting to protect our kids potential benefits and lifestyle. 

Yes. 

Starting today. 

Yeah. 

We don't know that, you know, we're going to be around for five,10, 30 years.

The whole process needs to start sooner rather than later. And with that you can couple with, all right, if I haven't started looking for government benefits or programs that would benefit my child, I need to start doing that. I need to start looking at setting up these accounts, making sure that there are assets that can fund these accounts. It's one thing to set up the accounts, but if there's no money in there or nothing that's going to fund it in the future, it's kind of a moot point, right? 

Yeah. 

So we need to make sure that we have a plan on funding them in the future.

The key is, is we don't know how soon our child will need those funds. We don't know how long we're going to be, so kicking that can down the street is, is not a very good idea.

 Okay. So what I'm hearing is there's no time like the present. 

There's no time like the present. I'll reiterate this. There's a lot of things that we go through as parents with children with special needs, you know. We're trying to maintain a job. We're trying to make sure things are good at home. We're saving for retirement. There's a lot of balls up in the air and things we're juggling. And I always say, if we have a lot to do, what we got to do is we got to keep moving forward. We got to have a plan of action. So make sure that if you have an elephant to eat, you're taking one bite at a time. 

Yeah.

We don't want to stress ourselves out and try to make sure that everything gets funded. Everything is squared away in one month because that's not probable. But what we can't have, is we can't have paralysis by analysis. Get overwhelmed to where we're not doing anything. We need to do something at all times to make sure that things are in place. 

Yeah.

So that’s the key. Again, it's not something that we want to put off for very long. 

Right. Okay. Paralysis by analysis. Yes. Good phrase. Yes. Because it can get overwhelming. You're right. You know, just doing life, and then add in that you've got a child with special needs to take care of with all the appointments. And if they're in school, all the IEPs and dealing with school and, and all of that. And then if they're older, what sort of day programs do we want them to go to? Is there an opportunity for employment? So all of that, there's a lot to navigate. So I think this needs to be an important part of navigating the life of our child; is that financial planning piece. And what I'm hearing, and I wish we had done it, started sooner rather than later. 

So John, where can our audience go to find out more about you?

You can visit my website at galliawealthmanagement.com. I'm also on LinkedIn. You can connect with me there. We’ll have some podcasts on the website.

Yeah. So, if you want to reach out to me, I'm available. Now, I am located out of St. Louis, Missouri, but I have clients throughout the United States. I don't have any in Canada, unfortunately, Valerie, because, country regulations, I can't really have that. 

But, yeah, so I'm available.

If somebody wants more information about what I do, they can reach out to me via email, via my website, and I’ll get back with them.

Awesome. Love that. Thank you so much. So, John, before we conclude, do you have any words of encouragement for our families who are listening today?

I will say this. Words of encouragement, I think, are essential. There are a lot of us, a lot of families out there that are dealing with the same things we are going through. Although at times we feel like we're on an island by ourselves, because maybe family members, close friends don't really understand time commitments how we're navigating our lives; it’s really tough, like I said, to comprehend unless you're going through it. Just know that there are people out there, there are groups out there that will support you, that you can find information for. You are not alone in this. Seek out folks that have a connection personally through special needs planning, if you want to go that route. Stay the course and chip off something every month. Nothing has to be done overnight. Nothing can get done overnight, as we know, but chipping away little bits at a time. We're spending a month taking care of benefits. We're spending this month doing a special needs trust. We're doing the next month funding that. That stuff will add up. And next thing you know, we have a solid plan in place and guess what? We're going to feel less stressed. And that's essential. 

I couldn't agree with you more. Well said. All about reducing the stress. 

Yes, absolutely. We are at our best when we mentally feel good, when we're physically taking care of ourselves, and when we know that we’re doing the things to take care of the ones we love. 

Yes, exactly. Exactly. And we need to be at our optimum so that we can operate at our best for our children. So love that you brought that up. 

Yeah, that's essential because you know, when we're dealing with special needs family members, I said this on the last podcast, there's four things that are really important to us.

One, our mental state, our physical state. Two, the mental and physical state of the people we love. Three, our finances. And four, our time. And when we're planning or trying to take care of somebody with special needs, it can negatively affect all those, right? We're going to have less time, less money. We're going to eat junk food because we don't have time to cook meals.

So we got to make sure that we're doing things to take care of ourselves, that we're at our best so that we can provide the best help to others.

Yes, love it. Thank you so much, John. 

So John is going to be back next month to share more in depth insights into financial planning considerations and how we fund those special needs trusts. 

So if you're watching on YouTube, please like and subscribe. That way, the show gets pushed out to others that may need this vital information. 

So everyone keep building your child's future

Live with Intention - Embrace the Journey.