Creating a Financial Strategy for Your Child with Special Needs

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Every family is different, which means that each of us must create financial strategies with our particular circumstances in mind. This is especially true for families caring for children with special needs. Parents often need to consider the present as well as the future for their children with special needs, including a future where parents are no longer managing their child’s day-to-day needs and agenda. 

What Happens When Life Takes An Unexpected Turn?

Your child’s diagnosis might occur during one of your prenatal visits with your health provider. It might come just after your child’s birth, or many years later. Regardless of when the diagnosis occurs, your world changes the very moment you first learn about it.

Once you have gained some perspective on your child’s health and the changes in your life begin to feel like second nature (it may happen sooner than you think!), you can start shifting your focus to the future, ensuring that your child has all the necessary arrangements in terms of financial and legal issues, government benefits and insurance, and developmental and emotional support.

Points to Consider

While parents of typically developing children may only be preparing for their child’s college education, parents of children with special needs are concerned with many additional immediate and long-term financial issues.

The good news is that there are many ways you can prepare, both legally and financially. Getting an overview of your current situation with a trusted financial professional and tackling whatever arrangements you are able to make on your own may help give you some financial confidence.

Financial and Legal Concerns

• • • Name a Guardian and a Trustee – A guardian is the person who will take care of your child if you and your spouse die before your child becomes an adult. Think about how much time you currently spend tending to your child’s needs. Who might be willing and able to take on this responsibility? It’s worth noting that the guardian you choose should not have control over your child’s money; this would be the job of the trustee.
    • Write a Letter of Intent – A letter of intent is a document written by you, which describes your child’s history, their current status, and your hopes and dreams for their future. It is not a legal document, but courts and others rely on it for guidance to better understand your child and your wishes for them. It’s commonly recommended to keep a copy with your will and the child’s guardian. A good time to update the letter may be yearly or whenever something changes.
    • Establish a Special Needs Trust – Protect your child’s ability to access necessary government programs and services by creating a special needs trust. Children and adults with special needs are eligible for many governmental services as long as they do not own assets worth more than a certain amount, usually $2,000. Without a special needs trust, children or adults with special needs could be disqualified from most governmental programs and could potentially be required to repay benefits they have already received.
    • Educate Your Family Members -While grandparents, aunts, uncles, and others might offer to assist you with expenses, make sure that your family knows the importance of not putting anything in your child’s name. This means that grandparents and others cannot leave anything to your child in their wills or name your child as their beneficiary to life insurance policies, savings bonds, stocks, or cash. They may, however, name the special needs trust as the beneficiary.
    • Build Your Savings -Take an inventory of your assets and liabilities. Determine your cash flow. Identify sources of income now and any you might have in the future. Put aside whatever you can each month to help you cover the cost of therapies and services that your child might need, especially those that neither your insurance nor the school system will provide. Remember, though, that you should not put this money in your child’s name. If applicable, find out if your employer offers a flexible spending account (FSA) or health reimbursement account (HRA) to help cover out-of-pocket healthcare expenses. Flexible spending accounts and health reimbursement accounts are two types of pre-tax benefit accounts that are used to pay for eligible expenses.
    • Write a Will – According to a recent survey, only 33% of Americans have a will or living trust. A will specifies what will be done with your assets after you die. Having a will ensures that your assets are left to the special needs trust and not to your child.

Governmental Benefits

• • • depending on the type and severity of your child’s disability, they might be eligible for certain federal and state government benefits, such as Supplemental Security Income (SSI) and Medicaid. Local, private nonprofit organizations might also offer resources or benefits. Many cities and counties keep a list of these services and post them through local newspapers, online parent groups, United Way, or similar organizations.
    • The federal Social Security Administration (SSA) is a good place to start to find out about available healthcare services. If your child is eligible and receives SSI, the SSA can also help you find state and local resources. 
    • Children who are eligible for SSI will also often be eligible for Medicaid, a healthcare program for people on low incomes and with limited resources. Even if your family has the means to take care of your child without governmental benefits, it may be a good idea to take advantage of these opportunities if your child qualifies.
    • Eligibility requirements differ from state to state. 

Educational Rights

• • • Children with special needs are entitled to receive extra services or accommodations through the public school system. Federal law ensures that every child receives a free and appropriate public education (FAPE). Section 504 of the Rehabilitation Act of 1973 guarantees that a child with a disability has equal access to education and that the education is comparable to that provided to typically developing children.
    • Federal laws exist to ensure that children with special needs have proper opportunities to receive a public education. It is often up to the parents to ask for consideration and provide the necessary information and paperwork.

Insurance Review

• • • Now is the time to review your health insurance coverage and make sure you understand how it works.
    • Determine what kind of healthcare plan you have.
    • Know your copays and deductibles.
    • If you have a PPO determine if your child’s providers in network and what the cost is if they are out of network.
    • Look at your prescription coverage and whether or now certain tests require preauthorization.
    • Also, look at your spouse’s and your own insurance policies—especially your life insurance, long-term disability insurance, and extended care insurance. Long-term disability and extended care insurance policies, in particular, could defray costs if you or your spouse become ill.

Emotional Support

• • • Now is the time to find your own resources. You may or may not need them immediately, but identify them now. This way, if and when you do need them, your list will be waiting. 
    • These resources could be therapists, support groups or other parents of children with special needs.

I hope you have found this information helpful. The process of planning for your and your child’s financial future can be overwhelming, but I am here to help.

You may also find useful articles on my website here: Clover Leaf Resources for Special Needs Families We also provide a list of resources and links that you may find helpful Clover Leaf’s Guide for Community Resources which we are continuously updating.

**The content is developed from sources believed to be providing accurate information and are the views of FMG Suite LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial professional for further information.