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Financial Planning When You Have a Loved One with Special Needs Financial Planning When You Have a Loved One with Special Needs
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Financial Planning When You Have a Loved One with Special Needs

Insights & Ideas Team •  January 5, 2015 | Your Finances

Financial planning is absolutely essential when someone with special needs depends on you for care and support. Yet when day-to-day demands consume every waking moment, it can be hard to find the time to plan–or even know where to begin.

Planning Beyond "One Day at a Time"

Like so many people, the idea of planning for the long term can be overwhelming and even more so when you have a loved one with special needs. You may be caring for a dependent child, sibling, or spouse, with challenges ranging from a physical or cognitive disability to difficulty with independent living or self-care. Whatever your particular situation, having a reliable financial plan is the best way to be sure there will be funds available well into the future for your loved one’s medical care, education, and long-term support, as well as necessities for yourself and/or another caretaker.

Working with experts who understand the challenges you face can help ensure a better quality of life for your loved one with special needs and help avoid mistakes that could deprive him or her of essential government support and benefits. Focus on the following steps to help attain peace of mind for you and the best care for your loved one:

1. Think Comprehensively and Set Goals-Planning for the entire family and all of your important goals is the best way to ensure that your loved one with special needs will be cared for today and throughout his or her lifetime. Your financial plan is the roadmap to achieving important goals for you and other family members, such as funding post-secondary education, saving for your retirement, and protecting your family if something should happen to you. Taking a comprehensive view recognizes that your loved one with special needs may still depend on you after you stop earning a regular paycheck.

2. Huddle with the Experts-Tap the best advice available to help you navigate the complexities of providing for an individual with special needs. Consider building a team of advisors, including an attorney, who can help you draft your will and various powers of attorney; a financial professional, who can help you develop your financial plan; and a social service professional to connect you with the appropriate community services. If you have a child with special needs, connect with your local school district to access their available resources, and pursue other information through support organizations and specialized media. Look for advisors who will focus on your needs and understand your particular situation, and who have specific experience working with families like yours.

3. Understand Eligibility Requirements and Consider a Special-Needs Trust-When structuring asset ownership as part of a financial plan, be aware of government eligibility and asset limits that affect your loved one with special needs. A special-needs trust enables you and others to provide funds for his or her support without jeopardizing eligibility for government benefits. The trust can hold money earmarked to pay for amenities that government benefits don’t provide, like entertainment, computers, travel, and other extras. A special-needs trust also can receive distributions from an annuity, life insurance death benefit, or other asset intended to support a loved one with special needs without jeopardizing that person’s eligibility for government benefits. It is important to speak to an attorney with experience in creating a special-needs trust. Also, consider writing a letter of intent with your wishes and concerns for your loved one’s future.

4. Define Roles and Identify a Trustee and/or Guardian-Once you have defined the goals of your trust, you need to find the right individual(s) to take care of your loved one when you aren’t able to. These should be people who are likely to outlive the person with special needs and who will follow the desires outlined in your letter of intent. A guardian oversees the person’s day-to-day care – food, housing, medical appointments, entertainment, transportation, etc. – and makes key decisions in cooperation with the trustee. A trustee is responsible for managing funds, decisions, and administrative duties for the trust. A corporate trustee can be selected to act independently or in conjunction with an individual trustee if you so choose.

5. Create a Financial Plan to Achieve Your Goals-Though it can be difficult to look beyond the moment when caring for individuals with special needs, you need to plan with the intention to provide for both your loved one’s future and your own. Northwestern Mutual’s planning process helps you assess your situation and budget for day-to-day expenses, including health and personal care, educational experiences, transportation, and other costs for you and your loved one. We’ll help identify funding sources that can cover those expenses – ranging from your existing resources to Social Security disability income (SSDI) or other programs – and identify any gaps or shortfalls. Your plan should address risks such as disability and long-term care, which could jeopardize your savings, and incorporate the right amount of life insurance to take care of your loved one’s needs after you pass away.

6. Implement Your Financial Plan-As you consistently set aside resources and fund your plan, you protect your family against risks and use investments to accumulate assets according to your goals, risk profile, and time horizon. And because circumstances change, especially for someone with special needs, be sure to periodically evaluate and update your plan to reflect your current situation and ensure it is performing to meet your goals.

Taking these steps to build a financial plan will help ensure that your entire family—including your loved one with special needs—is protected, cared for, and able to achieve their important goals. A financial representative can help you look beyond the day-to-day challenges and create a plan that will give you peace of mind, knowing that you have done everything you can to ensure your loved one will have the resources for a financially secure life.

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