Financial Planning

imgFinPlan1As the parent of a child with disabilities, one of your concerns will be to provide for the future for your child. Addressing legal issues is a crucial step in planning for the future. Creating and planning your estate is vital to meeting your child's lifetime needs. These issues fall into three main categories: wills, guardianships and special needs trusts.

Special Needs Trust

A Special Needs Trust is a special kind of trust that holds title to property for the benefit of a child or adult who has a disability. The Special Needs Trust can be used to provide for the needs of a disabled person to supplement benefits received from various governmental assistance programs. A trust can hold cash, personal property, or real property, or can be the beneficiary of life insurance proceeds.

Planning for your child's future can be overwhelming. It is best to consult a financial planning professional. An attorney who specializes in estate planning for families with a child with special needs can help you establish a will and, if needed, a special needs trust. Insurance agents and other financial professionals who specialize in needs planning, guidance counselors and parents of other children with special needs also are good resources.

Guardianship

A guardianship is a legal mechanism that grants an adult legal power to make decisions for another person, one who is considered incapable of making decisions himself or herself. There are different types of guardianship, each of which grants the guardian different powers. For more information, click here.

Letter of Intent

A letter of intent is another important document parents should have. Although not legally binding, this document provides direction for the person or persons who will care for your child or other dependent with special needs. The letter should detail medical history, daily care needs, housing and services, as well as your specific wishes and expectations as they relate to your child’s future. It is a working document for the future caregiver to follow.

One of the best ways to get started developing this letter is to think of a day in the life of your child. What are his or her habits? What are his or her routines? What makes him or her upset?

Share the letter of intent with the person(s) who will be caring for your child. Discuss it. If you aren’t comfortable that they share your views or that they are willing to respect them, you may want to reconsider your choice. A letter of intent is often the most important part of the plan.

Last Will and Testament

A will states how you want your estate to be distributed and allows you to select a guardian for your child when you die. If parents die without a will, generally state law will distribute assets to the children. Thus, it may be especially important to prevent asset distributions to a child with special needs.

It is important to make sure that all assets are kept out of your disabled child's name (including assets left in a will) so they can maintain financial eligibility for Medicaid or Supplemental Security Income (SSI). Currently, assets of just $2,000 distributed to a person with a disability may jeopardize federal government needs based assistance such as SSI. Benefits from state public assistance programs may also be affected. Assets can be kept and/or willed for your child's benefit (but kept out of their name) via a Special Needs Trust. Be sure to tell your extended family, such as grandparents, not to will assets directly to your child.

In addition to your will, some financial planners recommend a letter of intent. The letter serves as a guide providing valuable information on the daily life of your child and is to be used in case a new caregiver has to step in and manage your child's day to day activities. In addition to vital information on your child's medical history, medication and physicians, the letter of intent should include your child's likes, dislikes, hobbies, recreational and social preferences, food allergies as well as your hopes, dreams, wishes and aspirations for his or her future. The document should also detail your thoughts on a variety of matters such as dating, religion, sex, future living plans and academic and job readiness skills. While the letter of intent is not legally binding, it can function as a road map for future caregivers.