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If you’re feeling overwhelmed by all the steps it takes to plan properly for your child with special needs, you are not alone. I understand that life is busy with therapy sessions, school and IEP meetings, and doctor visits. Financial planning, and thinking about what happens to your child if you pass away probably isn’t the first thing you want to think about. Many families I work with have taken some steps to properly plan and make sure their child has the best possible quality of life once they are gone, but still have some gaps. Others admit it’s a topic they just don’t want to talk about, and some people just have no idea where to begin.
So why is it important to properly plan for your loved one? To answer that, I believe that families want their child with special needs to have the best possible quality of life. To insure this, you have to plan properly. If you don’t properly plan, you could disqualify your child from crucial government benefits such as SSI and Medicaid. Once on benefits, the individual with special needs can only have $2000 in assets in their name. That includes a home or any savings account, whether it is cash in the bank, or an investment account set up by the parents, grandparents, or anyone else. But don’t worry! There are ways around this to make sure the individual with special needs has access to money to supplement their SSI benefits and live the lifestyle they want to live.
Planning for an individual with special needs takes the typical financial planning you need to do and adds extra dimensions. Everyone needs to make sure they have an emergency fund, a will, a debt payoff plan, proper insurance coverage, and saving strategies for education and retirement. When planning for an individual with special needs, I look at it as if you are planning two retirements. You have to make sure you have enough money to live the lifestyle you want in retirement, but you also have to make sure there are enough assets left over to make sure your child with special needs will have enough to live the best possible life they can have. This involves setting up a Special Needs Trust and looking at your financial picture to figure of the best way to fund the Special Needs Trust. While a lot of families don’t have a large amount of assets they can set aside and fund a trust during their lifetime, there are ways to save on a monthly or annual basis to assure funds are available in a trust once the parents pass away. There are no limits to the amount of assets that can go into a Special Needs Trust.
Figuring out how much needs to be in a trust is another very common question I get. There is no simple way to figure this out, but I tell families that it starts with the life you want for your child. One of the largest expenses to factor into your child’s long-term planning is housing and personal care/assistance. There are many options, such as a group home, staying in your home once you pass, or all-inclusive living facilities. If your child stays in a group home, or in your home, you need to consider costs of a caretaker. These are all items that a Special Needs Trust can be used to fund. We can help you determine how much money will be needed in your child’s trust based on what lifestyle you would like them to have.
Another major issue I see within the special needs community is beneficiary designations. As I mentioned, an individual with special needs cannot have more than $2000 in assets directly in their name. If you were to pass away and you had your child with special needs listed as a beneficiary, they could be disqualified from benefits. I encourage you to check all beneficiaries of investment accounts and life insurance plans to make sure your child with special needs is not listed as a direct beneficiary, even if you have not set up your Special Needs Trust. This will ensure that assets do not go directly to them, therefore, keeping their government benefits intact. Also, it’s important to make sure other family members know to do this as well. I find that other family members, such as grandparents and aunts and uncles, want to leave money for the individual with special needs and name them directly as a beneficiary for life insurance. This would also disqualify your child from government benefits. Many times family members don’t want to discuss their financial situation with you, so once you have a plan in place, you can tell them how to direct assets if they want to leave them for your child.
To learn more about how to care and properly plan for your loved one with special needs, please contact me.
Continuum Planning Partners
12 Cadillac Drive Ste 440 I Brentwood, TN 37027
615-309-6326 (o) I 615-479-2933 (c)
SpecialCare Planning I Want to Know What You have and What It’s Worth?