Magazine article The Exceptional Parent

Planning for Your Child's Future

Magazine article The Exceptional Parent

Planning for Your Child's Future

Article excerpt

Families of children with special needs or disabilities routinely face complex issues and unique challenges when it comes to financial planning. For them, a wise investment for the future is not only critical, but it also is much more complicated than for other families. The goal is to create an integrated financial and life strategy that allows the child with special needs to maintain a sense of security, dignity and autonomy.

Planning carefully for the future will help alleviate some of the stress and anxiety that parents of children with special needs may feel. Knowing that their child will be cared for in the event of their demise is comforting. Here are some guidelines to consider:

It is essential for parents planning for a child with special needs to preserve and protect public benefits such as disability benefits, Supplemental Social Security Income (SSI) and Medicaid. These government benefits are available to provide food, shelter, health care and other living expenses for special needs children.

A Limited Conservatorship, established at age 18, will help protect the child from possible fraud and embezzlement.

A Special Needs Trust will fund a child's specific needs, including special therapies and interventions, educational programs, caregivers, equipment, and so on. Critically, a Special Needs Trust will ensure that the child remains eligible for government benefits, both federal and state. Its assets can be managed according to the parents' wishes. Like any trust, it can be funded with stock, real estate, or other assets, but is generally most easily managed with cash and liquid assets. Life insurance is also a good way to fund the trust. A Special Needs Trust is protected from creditors and litigation.

An Estate Planning Attorney is required to set up a Special Needs Trust.

A Letter of Intent will help clarify parental wishes for a child's future care and living arrangements. This letter can also detail characteristics of the child, including preferences for everything from food to environment. It is the vehicle through which parents can pass on their legacy. A Letter of Intent is not, typically, legally binding, but it can certainly help guide conservators or other types of guardians.

A Licensed Professional Fiduciary or Independent Trustee can be hired to ensure that the provisions of any trust are carried out as intended. This person can also provide assistance with tax returns, court filings, trust distributions and other budgeting issues.

Parents can transfer life insurance policies to a Special Needs Trust and designate the Trust as owner of the policy; thus, the death benefit of the policy is removed from the parents' estate. …

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