Caring for a child with a disability requires careful planning, extensive research, and a deep understanding of the available resources and strategies.
I asked Laura Croft, an attorney in Burlingame, CA, with expertise in estate planning for families with children with disabilities, for suggestions on approaching these issues.
Break the Planning Process into Manageable Steps
Planning for a child with a disability can seem overwhelming, but breaking the process down into smaller, manageable steps can make it less daunting.
Begin by assessing your child's current and future needs, considering factors like healthcare, education, housing, and daily living expenses.
Evaluate your financial resources, including income, savings, investments, insurance, and potential government benefits. This will help you determine how much you need to save and invest to meet your child's needs.
Establish a Special Needs Trust
A special needs trust is crucial to your child's long-term financial plan. This legal arrangement allows you to set aside money for your child's future without jeopardizing their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).
Different types of special needs trusts can be established for individuals with disabilities. The most common types include:
First-Party Special Needs Trust: This type of trust is funded with the beneficiary's assets, such as an inheritance, lawsuit settlement, or back payment of benefits. It is often used when the individual with disabilities receives assets directly.
Third-Party Special Needs Trust: This trust is funded with assets that do not belong to the beneficiary with disabilities. Family members typically set it up to provide for the individual's supplemental needs without affecting their eligibility for government benefits.
Pooled Special Needs Trust: A pooled trust is established and managed by a nonprofit organization. It combines the assets of many individuals with disabilities for investment purposes. Each beneficiary has a separate account within the trust.
Each type of trust has specific rules and requirements, so it is essential to work with an experienced attorney and financial advisor to determine the most suitable option based on your unique circumstances and goals.
By placing assets in a special needs trust, you can ensure your child can access additional resources to maintain their quality of life while qualifying for essential public assistance programs.
Build a Team
You don't have to do this alone... and you shouldn't!
Navigating the complex planning landscape for children with disabilities requires the guidance of knowledgeable professionals. Surround yourself with a team of experts, including a financial advisor, attorney, and benefits counselor, who specialize in helping families plan for children with disabilities.
When selecting a financial advisor for a family with a child with a disability, it's important to consider a few essential qualifications.
Look for a financial advisor with specific experience and expertise in special needs planning. This may include special needs financial planning credentials and extensive experience working with families in similar situations.
Financial advisors who hold the Chartered Special Needs Consultant® certification (ChSNC®) have received extra training in special needs planning and are required to participate in an annual recertification program.
Seek a financial advisor knowledgeable about government benefits and programs available to individuals with disabilities. This understanding is crucial in creating a comprehensive financial plan that maximizes available resources.
It's also essential to find an advisor who is a good communicator and listener, as they will need to understand your family's unique circumstances and goals.
Consider working with a financial advisor who is part of a professional network that includes attorneys and benefits counselors to provide a comprehensive and well-rounded approach to planning for your child's future.
Working with an attorney who will build a wall of protection around your children through comprehensive guardianship planning is critical. Laura Croft explains, "69% of parents have not named guardians, and the 31% that have named guardians have made at least 1 of 6 common mistakes." She offers a free report, “ Learn The Six Major Mistakes Families Make When Choosing An Estate Planning Attorney ... And How To Make A Loving Choice For Your Family,” and advice on how you can get started now and name guardians for free.
These professionals can provide valuable insights and strategies tailored to your unique situation, ensuring you don't overlook any critical aspects of your child's plan.
Communicate Openly with Family and Loved Ones
Having open and honest conversations with family members about your child's future is essential for successful planning. Discuss your vision for your child's life, their anticipated needs, and the roles that family members may play in their care.
Be mindful of the sensitive nature of these discussions, and choose your words carefully to foster understanding and cooperation.
By involving your loved ones in the planning process, you can build a strong support network that will be there for your child when you can no longer provide care yourself.
Review and Update Your Plan Regularly
Regularly reviewing and updating your plan is essential as your child grows and their needs evolve. Changes in government benefits, tax laws, and your family's financial situation may necessitate adjustments to your strategy.
Schedule annual reviews with your financial advisor and attorney to ensure your plan remains up-to-date and aligned with your goals.
Final Thoughts
Planning for your child's future with special needs requires a proactive, informed approach. By breaking the process into manageable steps, establishing a special needs trust, working with experienced professionals, communicating with loved ones, and regularly reviewing your plan, you can create a solid foundation for your child's long-term security and well-being.
Start planning early and remain committed to adapting your strategy as your child's needs change.
As a financial advisor dedicated to helping families with disabilities, I am here to guide you through this process and provide the support you need to make informed decisions. Together, we can develop a comprehensive plan that gives you peace of mind, knowing that your child's future is secure.
