As the parent of a special needs child, you work hard to give your child the most fulfilling life possible, and to meet their medical, educational, and therapeutic requirements. But don’t neglect their financial health. Your child will likely outlive you, and there are particular legal and regulatory issues to consider. However, good planning can help ensure that your child has financial resources later on.
Start with a Plan
Begin by making an estate plan and update it as your circumstances change. This should include a will with specific directives for both your child and yourself. If you’re incapacitated, you might be unable to make decisions for your child. And if you don’t plan for your own retirement and health care needs, you might not be able to help them as much as you’d like.
Next, consider the guardianship/conservatorship process to take legal/financial control of your child’s life. This generally terminates at age 18, after which your child might need a trustee or other protections to carry them through adulthood and past the deaths of their parents.
Your child’s assets are a vital consideration. A child with more than $2,000 of total assets in his or her name cannot qualify for federal benefits such as Supplemental Security Income (SSI). This is especially crucial because in most states SSI recipients are automatically eligible for Medicaid.
The Special Needs Trust
The answer to the assets problem is the Special Needs Trust, set up to accumulate, manage, and disburse monies for a child with a disability. The trust holds assets (including money won in a lawsuit about a disabling incident) that are not considered to be personal wealth. The trust can also be the beneficiary of any inherited assets. With a few limitations, this won’t affect the child’s eligibility for government benefits.
A Special Needs Trust must be created and funded by a third party, such as a parent or grandparent. The trust can be established during your lifetime or through your will. Ideally the trust should be set up before your child turns 18, but it works at any age. The disabled person should not create the trust, fund it with his own assets, or have any control over it. The trust must be administered by an independent trustee with the authority to make discretionary non-support distributions. To avoid jeopardizing government benefits, trust payments must go directly from the trust to service providers.
Your Special Needs Team
It is important to identify specialists who understand the complexities of the unique needs of your child. Here’s a quick checklist:
- An attorney is required to set up a Special Needs Trust. Look for one with expertise in this area.
- A social worker can help you seek out benefits programs, public and private, that provide resources for special-needs situations. In addition to federal programs, look for state and local resources.
- An attorney or social worker with expertise working with special needs children can help you draft a “letter of intent” that communicates your family’s vision, desires, and concerns for your child to current and future caretakers.
- A guardian should be identified who will step in if you become unable to make decisions for your child and to take over after you die.
- Peer groups for families in special-needs situations can be a good source for professional referrals and service recommendations, plus common sense advice and reassurance that you’re not alone in facing this challenge.
Finally, it’s important to get sound financial advice. A person with special needs may not be able to work or save for retirement, and they often have state restrictions on their investment options. Find a financial advisor you trust to plan a secure future for your special needs child.