Over 42.5 million Americans have disabilities, according to the Pew Research Center. Whether the disability is cognitive, developmental, physical or something else, it impacts the individual and their family and requires intentional planning.
When it comes to securing the financial future of a loved one with a disability, traditional planning may fall short. Planning requires a tailored approach to help establish long-term stability and quality of life. It can also help offer protection from financial missteps and fraud. There are many strategies to help your family member be well-cared for in the future. Your financial advisor can guide you through understanding the financial tools available and making a plan to help create financial security without jeopardizing public assistance benefits or your own financial security.
Envision your loved one’s best life and make a plan to get there
To help your child realize their best future, start by creating a life-care plan, or a road map, with educational, living and career planning.
Considered a letter of intent, this document should summarize your child’s likes, dislikes, habits and aspirations. Also, inventory the projected caregiving costs from now through adulthood, including housing, education, equipment, transportation, medications, home modifications, therapies and others.
A letter of intent is a helpful tool, yet it is not legally binding and lacks the depth and detail of a personalized plan. So, creating a plan is vitally important.
Some key questions to ask if you have a child with a disability:
• What will happen to your child as you age and are no longer around?
• Will your child need someone to oversee their care and pay their expenses?
• What about your own financial security in retirement?
• How about other family members? Will you be able to leave a legacy for them?
Steps toward creating an effective plan
Step 1
Develop a vision—what support does your family and your child need? What are the hopes and dreams for your child and your family’s future? Consider both short- and long-term needs, including medical and physical care, therapies, education, college or vocational training, community inclusion, housing and daily living expenses.
Step 2
Build a team of professionals and family members who can work together to develop a comprehensive plan. For many families, expanding the reach of support resources will be helpful for the long-term sustainability of the care plan. Tapping into local support organizations and nonprofits is another practical step.
Step 3
Understand government benefit programs such as Medicaid, Medicare, Supplemental Security Income (SSI) and Social Security Disability Insurance. Work with your team to maximize benefits and preserve eligibility. You may also wish to look into Supplemental Nutrition Assistance Program (SNAP) benefits, federally assisted housing, energy assistance and group homes.
Step 4
Create a customized plan for you and your child that integrates budgeting, insurance, estate planning services and investment strategies. Consider the inclusion of special needs trusts, Achieving a Better Life Experience (ABLE) Act accounts and other strategies to protect assets and provide for your child’s long-term financial stability.
Step 5
Monitor and revisit your plan annually and at important age-based milestones. Staying current with government benefit changes and qualification rules should be part of your ongoing monitoring process. It’s also important to understand and plan for how benefits change at age 18 when your child becomes a legal adult.
The most important asset your child has is you. Hence the importance of a personalized, goals-based plan that reflects what’s most important to you and your family—a plan that simplifies complexities and flexes when life changes. For families with a child with a disability, a wealth plan coupled with a letter of intent and a special needs trust can provide clear answers to difficult questions
Basics of special needs trusts
As a parent, you want to provide a high quality of life for your child, and that’s where special needs trusts can come into play.
A special needs trust is for individuals receiving public benefits. It is intended to be supplemental, so it should be structured in a way that the trust funds are used to cover expenses beyond what government programs provide.
A special needs trust holds financial assets for the beneficiary without impacting the person’s eligibility for government benefits. Assets may be used to pay for many uncovered expenses to help enrich a loved one’s quality of life. The trust may make funds available for therapies, procedures and specialized medical equipment, plus education, training and other items.
A special needs trust can also help:
• Address concerns of quality and cost of care
• Create a higher level of care
• Protect a person susceptible to undue influence or unable to manage money
• Streamline administrative tasks through professional trustee and money management services
• Preserve family wealth
There is much to consider when you have a loved one with a disability. Planning is essential for future care and financial support. Your financial advisor can help you build and execute a plan that best fits your situation.
Contact your financial advisor today to get started or to evaluate your current plans.