If you’re feeling overwhelmed by all the steps it takes to plan properly for your child with special needs, you are not alone. I understand that life is busy with therapy sessions, school and IEP meetings, and doctor’s visits. For many families financial planning ends up being last on the to-do list. Often times, this is a result of the many steps involved in adequately planning. In my work, I have some families who have taken some steps to properly plan, but still have some gaps. Others admit it’s a topic they just don’t want to talk about, and some just have no idea where to begin.
So why is it important to properly plan? A proper plan allows families to safeguard the best possible quality of life for their child with special needs. Failing to properly plan could disqualify your child from crucial government benefits such as Social Security Income (SSI) and Medicaid. Once on benefits, the individual with special needs can only have $2000 in assets in their name. That includes a home or any savings account–whether it is cash, in the bank, or an investment account set up by parents, grandparents, or anyone else. But don’t worry! There are ways around this to ensure the individual with special needs has access to money to supplement their SSI benefits and live the lifestyle they desire.
Planning for an individual with special needs adds an extra dimension to the typical financial planning families need to do. Everyone needs to make sure they have an emergency fund, a will, a debt payoff plan, proper insurance coverage, and saving strategies for education and retirement. When planning for an individual with special needs, I look at it as if we are planning for two retirements. You have to make sure you have enough money to live the lifestyle you want in retirement, and that there are enough assets to help your child with special needs live the best possible life. This involves setting up a Special Needs Trust and looking at your financial picture to figure of the best way to fund the trust. While many families don’t have a large amount of assets to fund a trust during their lifetime, there are ways to save on a monthly or annual basis to assure funds are available in a trust once the parents pass away. There are no limits to the amount of assets that can go into a Special Needs Trust.
Once we determine to set up a trust, the next question is usually, “How much money should be in it?” There is no simple way to figure this out, but I tell families that it starts with the life you want for your child. With that picture we can help you determine how much money will be needed in your child’s trust. One of the largest expenses to factor into your child’s long-term planning is housing and personal care/assistance. There are many housing options, such as a group home, living in the family home, or an all-inclusive living facilities. If your child stays in a group home, or in your home, caretaker costs should be considered. These are all items that a Special Needs Trust can be used to fund.
Another major issue that arises during the planning process for families with children with disabilities is the beneficiary designations. As I mentioned, an individual with special needs cannot have more than $2000 in assets directly in their name. If you were to pass away and you had your child with special needs listed as a beneficiary, they could be disqualified from benefits. I encourage you to check all beneficiaries of investment accounts and life insurance plans to make sure your child with special needs is not listed as a direct beneficiary, even if you have not set up your Special Needs Trust. This will ensure that assets do not go directly to them, therefore, keeping their government benefits intact. Also, it’s important to make sure other family members know to do this as well. I find that other family members, such as grandparents and aunts and uncles, want to leave money for the individual with special needs and name them directly as a beneficiary for life insurance. This would also disqualify your child from government benefits. Many times family members don’t want to discuss their financial situation with you, so once you have a plan in place, you can tell them how to direct assets if they want to leave them for your child.
I don’t expect to have answered all your questions and concerns, but I hope that this brief explanation of the planning process can help you with the first step: seeking help. To learn more about how to care and properly plan for your loved one with special needs, please contact me.
Continuum Planning Partners | www.continuumplanningpartners.com | 615-309-6326