A Financial Plan for a Child with Special Needs

Special needs kids 3Families raising children with special needs don't always know how to begin their financial planning.

Experts estimate that raising a child to age 18 costs roughly $250,000 and those parents of children with disabilities and special needs will have costs that could be as much as 10 times more. With these types of financial challenges, here are some key areas to focus on to protect and grow your money.

  • Assemble a team of experts. That team should include an elder law attorney, doctor, accountant, and government benefits specialist to help you understand Social Security, Medicaid, and other state and federal government programs;
  • Draft a letter of intent. This is the child's history, medical needs, doctors, allergies, and likes and dislikes, which can be helpful to guide and direct your child's future trustee and guardian;
  • Draft a will. This gives direction to your child's guardian and to the courts as to how assets should be moved and allocated;
  • Create a Special Needs Trust (SNT). This will serve as a separate entity for your child to keep money so that he or she isn't disqualified from assistance programs; and
  • Create a plan for building assets.

Let's focus on the special needs trust. Setting up a special needs trust is a fairly straightforward process, but the laws surrounding special needs trusts are very complicated. Don't try this on your own. Hire an experienced elder law and Special Needs Trust attorney.

With a special needs trust in place, you make certain that there's a financial mechanism to continue to provide the child with the highest quality of life possible. Completing a SNT can take a big weight off of parents' shoulders. Many parents wait until it's too late, or they leave money directly to the child. This makes everything much more complicated.

Selecting the future trustee is a matter of determining who will be the right person for the job. It may not be the caregiver. Some special needs trusts use professional trustees or pooled trusts, which are administered and managed by non-profit organizations.

Special needs require special planning. You should work with your team and your family to establish a climate to help you raise and provide for your child. Once created, this will offer you peace of mind in protecting and caring for your family and child.

Reference: The New York Daily News (April 1, 2016) "How to prepare a financial plan for families with special needs children"


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