What is special needs financial planning?
One of the questions that haunt parents of children with special needs is, “After us, what?” Their concerns include the physical and emotional security of their child, comfort, safety and healthcare needs, enjoyment and quality of life, continuing the standard of living that the person with a disability has been used to, and ensuring lifelong financial independence. There are many options, and ways of getting help if this is something that’s worrying you, like home health care services, homes which staff are professionally trained and many more. If you’re looking for information about care in the home in Australia, then Care for Family In-Home Care Services offer lots of helpful information in their post about the National Disability Insurance Scheme (NDIS) or search ‘home care services near me’ for similar services in your area.
However, parents also face large financial commitments throughout their lifetime and that of their special needs child’s. According to Autism Speaks, the average annual cost of caring for a child with autism could be in the region of $60,000, and the lifetime cost of caring for a child with an intellectual disability could range between $1-2 million.
That is why it’s crucial to begin financial planning as soon as you receive a diagnosis.
Points To Consider At The Outset
Take Stock Of Your Circumstances: If both parents are working, you will need to plan for daycare expenses apart from special needs programs and therapy. Based on the nature and extent of disability, the child may need regular medication, physiotherapy, counseling, CBT or other therapies, additional resources for exercise and entertainment, etc. Get a ball-park figure of these expenses from professionals in the field, other parents, and do your own research. Add these expenses to your regular household expenses, and you will get a fair idea of what your monthly expenditure will be.
Changing Needs: Early childhood intervention programs, academic, vocational, or skill-building programs and types of care would differ as your child’s requirements change with age. This can be done with the help of an approximate timeline starting from your child’s infancy into adulthood. Be aware of your position on the timeline at every transitional point and ensure that you can make a smooth crossover. Review your financial plan at least once every 3-5 years.
What About Gaps? Obviously, you can’t control everything. Life can take unexpected turns – either parent can die, suffer a terminal illness or serious disability/injury, etc. that could result in a paradigm shift in your financial status. One way to deal with potential gaps is to start building a corpus or emergency fund to meet unforeseen needs. Examine your timeline regularly so that you can review it and make the necessary changes.
Mistakes To Avoid: Don’t completely disinherit your child with special needs. Instead, secure their financial future with funding via trusts. Don’t depend on siblings or other relatives to take care of the person with special needs after your demise, even if you provide funds for this purpose. Ensure that all contributions are made to a special needs trust so that your child will not become ineligible to receive federal funding.
Special Needs Financial Planning Tips
- Maintain Perspective: If you have other children, dependent parents, or others, you need to care for, ensure that you divide your finances proportionately. Avoid thinking on the lines that the government would provide complete support.
- Educate yourself: Your financial planning should be made based on the existing disability laws, disability special needs trusts, available government assistance, the ABLE Act and facilities, etc. This can be done by becoming part of a support group of parents of children with similar special needs as your own such as Autism Speaks etc. You can also research your own state laws on your child’s entitlements and your own responsibilities.
- Acquaint Yourself: with your local political representatives and state officials to stay in touch with funding and different programs available. There are several scholarships and non-profit grants available for children with special needs. These grants can be utilized to access a range of services such as medication, wheelchairs, speech therapy, medical equipment, Braille literacy, prescription medication, etc.
- Include extras: While creating a special needs plan, consider expenses such as caregivers, respite care, transportation, assistive devices, technology-aided devices, legal/financial services such as e-prescribing software and NDIS invoicing, etc.
- Transitional phase financing: Most states stop providing public education services by the time the special needs person attains age 22. You may require funds for vocational training, personalized training, residential/respite care facilities, etc. Your long-term financial plan should have taken this into account.
- SSI, ABLE, Medicaid: Ensure that your child with special needs qualifies for these services and that the funds in their personal names does not exceed $2000 at the time of application. Children under 3 are eligible for certain benefits, while those beyond age 18 can avail of a different set of facilities. Children under 19 whose parents cannot afford private healthcare, but are not eligible for Medicaid can avail of the Children’s Health Insurance Program.
- Your own Financial Goals: If you have other children, make sure that they understand all aspects of your financial plan for the special needs child, your own retirement plans, how your assets will be distributed after your demise, life insurance policies, etc.
- Create Your TTCO: Make sure that you design a team to carry on (TTCO) after you and your spouse’s demise that will continue the care and well-being of your special needs child. Include your extended family in these discussions for the right advice and assistance. There may be other family members, such as grandparents and other relatives who wish to contribute to your child’s future. However, ensure that funds are not directly gifted or transferred to the child’s account as this could come in the way of their eligibility to avail of government funding. Instead, they can transfer money to the special needs trust you have set up. Plan for your own retirement funding and make sure that you know the difference between Roth IRA and Roth 401k so that you can avail of employer benefits as well.
- Special Needs Trusts: Parents, caregivers, family members, well-wishers, etc. of the special needs child can contribute to special needs trusts that don’t jeopardize the chances of accessing various government benefits. You can also name the trust as the beneficiary in your will. Keep the inter-generational aspects and family dynamics in mind while creating your trust so that things run smoothly for your special needs child who cannot advocate for herself/himself. A third party trustee has to be appointed to disburse and manage the funds.
- Get professional help: from qualified, reputed professionals who can help with all aspects of financial planning. They should be able to help you with creating different accounts, planning how to fund these accounts, asset management during and after your lifetime, assistance with accessing government funding, housing, life insurance, healthcare, and medical insurance, ABLE accounts, creating a letter of intent for trustees, designating a legal guardian, etc.