Financial Planning for Parents of a Special Needs Child

Financial Planning for Parents of a Special Needs Child

Nearly 54 million Americans cope with special needs and the rising associated expenses, according to the National Organization on Disability... 5:49 AM

Nearly 54 million Americans cope with special needs and the rising associated expenses, according to the National Organization on Disability.  The U.S. Census Bureau reports that one in every 26 American families is raising a child with a disability.  When planning for your child’s future, don’t focus on the disability but rather on your child’s capabilities and their potential for independence.

Here are four important steps the parents of a child with special needs should follow:

1.   Protect Your Child’s Eligibility for Government Benefits

Make sure there are no benefits recorded in your tyke's name that surpasses an aggregate of $2,000. Having any advantages worth more than $2,000 would preclude your exceptional needs subordinate from numerous government and state help projects, for example, Social Security and Medicaid. 

Make sure any loved ones individuals know this lawful goody also. In the event that grandmother needed to leave a legacy to your kid or compose an extremely liberal check to help, this could put your youngster over that edge and the legislature could solidify your tyke's advantages. They can present resources, yet request that they place it in your name not your child's.

2.   Protect Your Child by Purchasing Life Insurance

Raising a child costs a lot of money.  Raising one with special needs typically requires a substantial amount more.  The average cost to raise a child from birth to age 18 is $240,000; for a special needs child those expenses can quadruple.  The parent of a child with special needs spends an average of $330 per month1 out-of-pocket just on medical expenses.  Who is going to pay for these expenses if you die prematurely?  You need to have a plan in place to make sure your loved one is taken care of when you are not able to do so any longer.

If you are a single parent raising a child with special needs, you need life insurance.  If you are part of a couple raising a child with special needs, you both need life insurance.  When the time comes to list your policy beneficiaries, do not name your special needs loved one.  Life insurance proceeds would be included in your child’s assets and would disqualify them from government assistance since it most likely would put them over the $2000 limit.

Work with an attorney to set up a Special Needs Trust.  Instead of naming your loved one as the beneficiary of your life insurance policy, name the trust as the beneficiary.  With a special needs trust in place, money can be designated to enhance your loved one’s quality of life while still allowing them to receive government assistance.  With a trust in place, friends and family can choose to leave money for your special needs child by naming the trust as the recipient.

3.   Create a Will

At the point when tending to a tyke with extraordinary needs, it is critical to make a will that states who might be the lawful gatekeeper of your adored one if you bite the dust. It would be up to the state to choose who ought to administer to your kid if there is no will set up. It is suggested that you employ a legal advisor who works particularly for individuals with extraordinary needs and knows about your state's incapacity laws to make the report. 

Make certain to state in your will that your exceptional needs youngster is not the beneficiary of your domain, but rather that the unique needs trust is. Without a will set up, laws in numerous states will, as a matter of course, make your youngster your heir2. Once more, this would preclude them from government programs.

4.   Don’t Postpone Planning For Your Own Future

You need to plan for the fact that when you are of retirement age, you still may be caring for your special needs child.  It’s time to budget and think through the next 10, 20, 30 years.  You may have to effectively plan for two generations.

When your child turns 18, the government considers them a legal adult.  Depending on your child’s disability, you may need to be appointed legal guardian of your adult child if he/she will not be able to make decisions about their medical treatments and finances.  If your child can be considered competent at times, then having him /her name you as durable power of attorney may be the easiest route for your loved one.