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Planning For the Future
with a Special Needs Child - Part 1

The Child’s Long-Term Needs
By Harry S. Margolis and Eric Prichard

(Page 1 of 2)

As if the job of being a caregiver for a special needs child is not difficult enough on its own, Baby Boomers often find themselves becoming dual caregivers for both their children and their own aging parents. They may have to provide constant care and attention to their children even after they reach adulthood; while their parents are probably facing their own set of challenges as they grow older. At a certain point, the caregiver will likely have to assist their parent with the same set of issues that they have to face with their child with special needs, namely how to pay for essential services while securing medical care and affordable housing, and simply providing the love and attention they need. This dual caregiver relationship is never easy, but for parents of children with special needs, planning for their own long-term elder care is essential because very often the special needs child will be unable to provide the necessary assistance.

Planning for your own long-term care when you have a child with special needs requires a delicate balancing act between establishing your own financial position to ensure a comfortable retirement and making sure that your child’s needs are protected, both while you are alive and after you are gone. Most parents of children with special needs will immediately think of what they should do to protect their children’s future before concentrating on their own needs. However, there are ways for parents to accomplish both goals at once, through careful estate and special needs planning. By working with a well-qualified attorney and financial planner who specialize in helping families with special needs, a caregiver can establish a child’s security for life, while making sure that she will be well cared for when the parent needs his own cane to lean on further down the road.

In this first part of this series, we explore the tools available to parents of special needs children to provide for the long-term medical care, housing, and financial assistance the children will require In the two parts to follow, we will explore the tools available to parents looking to secure their own long-term needs into and beyond retirement, and finally take a look at how to balance these long-term needs of parent and child throughout their lives.

Over the course of her lifetime, the person with special needs requires a host of services, including medical care, housing, job training, and financial assistance. Various government programs can provide a broad spectrum of services designed to aid an individual with special needs. These programs range from very comprehensive (like Medicaid and Medicare) to very specific (like computer training and specialized housing), but most have one thing in common — the beneficiary must fall below some predetermined income or asset level, or both. Fortunately, planners have developed a very important instrument that can hold funds for a child’s future needs while allowing them to qualify for many types of public benefits. These tools are called “supplemental” or “special” needs trusts because they are designed to “supplement” any benefits a person with special needs may receive from the government.

Supplemental needs trusts are one of the most important parts of a parent’s estate plan because they allow maximum flexibility to manage a child’s care during every stage of her development. Typically, when you think of leaving an inheritance, you picture a dusty law office, the opening of a cracked will, and bingo - everyone gets their share. For parents of children with special needs, however, it is imperative that the share meant for the child with a disability flow directly into a supplemental needs trust in order to protect the child’s benefits. A qualified attorney can correctly set up your will to accomplish this.

Provided the trusts contain the appropriate language, funds from a retirement plan or life insurance policy, not just from a parent’s probate estate, can flow directly into the trust when a parent passes away, avoiding a potential loss of benefits should the child receive the money outright. Furthermore, trusts allow parents to make their intentions and caregiving goals clear. While a trustee must have independent discretion to distribute the funds to or for the benefit of the person with special needs, the trust can outline the child’s needs, the parent’s wishes, and can even include a special group of family friends and relatives called trust advisors who consult with the trustee on matters related to the beneficiary’s care. In other words, trusts are incredibly flexible and must be included in any responsible estate plan.

 

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