One thing they don't tell you about raising a special needs child: Between doctor's appointments and therapy visits, you'll spend more time shuttling around town than an Uber driver. Another thing they don't tell you? You'll likely be so overwhelmed with day-to-day care that you don't have time to think about questions like who will support your child and who will take care of them in the future.
Unfortunately, there’s never going to be a perfect time to sit down and think about the long term. But your child will need care, and you may not always be there to provide it. When you plan for your child’s financial future, you can give yourself peace of mind that your child will be cared for in the years to come. Here's how to start planning for the future when you have a child with special needs.
Unfortunately, there’s never going to be a perfect time to sit down and think long term.
DEFINE AND DOCUMENT YOUR GOALS
What’s your vision for the life of your child with special needs? Who will care for your son or daughter after you’re gone? As you think about your goals and visualize the future, consider completing a letter of intent that details the care your child receives and your wishes for how that care should be carried out in the future. The letter is not a legal document, but it can be a big help to others who will care for your child when you are no longer able to. Share the letter — and your expectations — with future caregivers while you’re alive.
MAKE SURE YOUR CHILD GETS BENEFITS
Many people don’t realize their loved one with special needs may be eligible for federal benefits. If they qualify, those benefits can amount to hundreds of dollars a month. When your child is under 18, he or she is eligible for benefits if you and your spouse (or your child’s legal guardians) make less than a combined $30,000 a year. Once he or she turns 18, the federal government no longer considers the parents’ income when determining eligibility. Instead, it considers only the income of the person with special needs. If he or she makes less than $30,000 a year, your child will be eligible for benefits.
In the meantime, as you care for your child with special needs, keep in mind that some of your expenses may be tax deductible.
To avoid leaving money on the table — either in terms of identifying opportunities to reduce your income tax burden or receiving federal benefits — it’s a good idea to get expert advice. Ask school social workers or organizations dedicated to helping those with special needs for advice about what benefits might be available. An accountant can help you identify opportunities to deduct expenses related to special-needs care.
ESTABLISH A SPECIAL-NEEDS TRUST
During the lifetime of your child with special needs, you or other family members might want to leave money, life insurance proceeds or other assets directly to your child to help ensure his or her quality of life. But in doing so, you might unknowingly disqualify him or her from government programs because persons with special needs are eligible for most government programs only if they own assets worth less than $2,000 (or as little as $1,000 in some states). That’s where a special-needs trust comes in. By establishing a special-needs trust in the name of your child, you and other family members can leave assets to the trust rather than directly to your child, preserving his or her benefit eligibility.
To establish a trust, it’s a good idea to work with an attorney who has experience drafting special-needs trusts. To find an attorney in your area, try the Special Needs Alliance or the National Academy of Elder Law Attorneys.
PLAN TO FUND THE SPECIAL-NEEDS TRUST
Once you establish the trust, work with your financial planner or professional to develop a plan to fund the trust. One method of funding a trust is through permanent life insurance. Still, it’s important to consider this as part of your overall financial plan and alongside other financial priorities, such as education and retirement.