Parents of children with special needs tend to put much of their focus in the present. There are pressures to make sure the child is in the right school, working with the right therapist, and getting the proper support. With so much happening today, it can be easy to lose sight of what is needed to prepare for tomorrow. This is especially true when it comes to family finances.
“Families of [children with] disabilities have been given both a gift and a challenge,” says Chaz Levinson, financial advisor with Wealth Strategies. “They have uniquely special needs and legitimate questions. Families become anxious about how they will provide financially for a child, especially as they age. They worry about what will happen to their child if one of them becomes disabled or passes away.”
Following are five important considerations from special needs financial planning experts.
1. Address present needs and understand available support.
Most children with disabilities require therapies, treatments, and educational support that parents have to pay for out of pocket. The first step is to tackle those immediate needs.
“Present financial concerns obviously take priority and are individualized to each family and child’s needs,” says Matt Cloven, disability advocate and consultant with Peacewolf Advocacy & Consultation. “Know what resources are available to your child to help offset or mitigate medical or therapeutic costs.”
There are public benefits available, such as those from Social Security and Medicaid. Parents should explore those potential benefits and find out about financial support that might be available to their children now and in the future.
2. Balance your child’s needs with your own.
In the same way that flight attendants tell passengers to put on their own masks first before assisting their children, financial planners encourage parents to consider that the best special needs planning incorporates the needs of the entire family. Before you can plan for your child, you need to have a healthy financial foundation for yourself. This is where it is helpful to talk to experts about short- and long-term goals, investments, and retirement. Savings and insurance strategies can be effectively integrated.
“Government benefits like Supplemental Security Income (SSI) are helpful, but they provide only a fraction of what is needed to have a safe, secure, and fulfilling life,” explains Andrea Turner, investment advisor representative with GrowStrong Wealth Strategies. “We must plan and prepare for our child and family member’s lifelong needs, as well as our own retirement.”
3. Understand trusts and ABLE accounts.
If your child qualifies for lifetime benefits through Social Security or Medicaid, leaving them money through traditional avenues can disrupt or make your child ineligible for those benefits. When you do your estate planning, make sure to consult financial or legal professionals fluent in this area.
“Parents that have applied for government benefits can establish a special needs trust, which is a legal vehicle that can help provide for the child without interfering with their eligibility for public assistance. Alternatively, or concurrently, they can use an ABLE account as well,” Levinson says. An ABLE account is a tax-advantaged savings account for individuals with special needs and their families.
“If there is going to be a will, or grandparents leaving assets, it is important to consult with a financial advisor or attorney that is knowledgeable in special needs planning, resources and protections for public service access,” Cloven adds.
4. Draft a letter of intent.
One of the best ways to assuage worries about your child’s future is to establish a positive vision of what you would like to see happen, so others will have a road map for your child’s care.
“Taking the time to write a letter of intent or last wishes letter is essential,” Turner says. “Think of it as the largest, most comprehensive instruction list you’ve ever written, that will allow someone to step in should something unexpected happen to you.”
Levinson adds that this document should include information about your loved one’s habits, needs, and wishes for ongoing care.
5. Start early.
Many families come to us when their children are in their mid-to-late teens and they are just starting to think about what they need to do,” Turner says. “Ideally, it’s best for families to meet with us when their child is 12 or younger, to make sure their assets are properly designated.”
Levinson agrees. “Today, we have powerful insurance tools designed for families of children with challenges,” he says. “These tools can replace the family’s income if a parent dies or becomes disabled. Developing a financial plan can give families peace of mind.”
Who To Consult for Special Needs Financial Planning
Turn to these resources and professionals for help with planning and advocacy.