Financial planning for parents of children with special needs involves unique challenges and considerations. It requires a well-thought-out strategy that not only secures the financial future of the family but also ensures the lifelong care and support of their special needs child. This planning includes various financial solutions such as special needs trusts, government benefits, and life insurance, all tailored to meet specific health, educational, and living needs. Understanding the intricacies of these financial tools and how they interact with legal requirements is crucial for parents to effectively protect their child’s future and enhance their quality of life.
If you’re a parent of a child with special needs, ensuring their long-term financial security is crucial. At The Matus Law Group, our skilled New Jersey special needs trust attorneys are dedicated to guiding you through the intricate process of financial planning. We can help in creating tailored trusts that safeguard your child’s future and maintain their eligibility for government benefits. Contact us today at (732) 785-4453 to learn how we can provide the peace of mind and security your family deserves.
Terms and Concepts
Supplemental Needs Trust: Also known as a ‘special needs trust,’ this is one of the most commonly utilized financial planning tools to ensure that disabled children and adults have lifelong access to assets. This trust allows you to provide funds for your disabled child’s benefit without affecting income caps that could prevent them from receiving need-based government benefits.
Trust Beneficiary: This term refers to the individual who receives the benefits from a trust, such as a special needs trust. In the case of a special needs trust established by a parent for a special needs child, the child would be the beneficiary.
Trustee / Co-trustee: When a trust is created, the creator of the trust must establish a trustee to administer the assets. This person will be in charge of disbursement of funds, managing the assets, and fulfilling your wishes with regard to how the trust should be administered. Oftentimes, when you create a special needs trust, you will name a trustee who is a financial professional, and a co-trustee who is a loved one or family friend who knows and helps care for the disabled beneficiary.
Guardianship: A person named as a legal guardian is given the power to make legal decisions for another person due to that person’s incapacity to do so for themselves. In the context of special needs planning, you will need to name a guardian who will care for your special needs child if anything ever happens to you, and you will also need to establish a guardianship for yourself over your special needs child once he or she turns 18 in order to continue making decisions about your child’s care and finances.
Medicaid: This is a social health care program in the US that provides medical care for people with low incomes as well as numerous people with disabilities. Medicaid has the potential to pay all or much of your costs with regard to raising and caring for a special needs child, but there are numerous intricacies involved in qualifying and maintaining qualification that require in-depth attention and planning.
Supplemental Security Income (SSI): This is another government program that provides income in the form of stipends to low-income disabled people. There are very specific requirements regarding income and ability to work that must be considered and planned for in order for a special needs person to maintain their SSI benefits.
Representative Payee: In the context of SSI benefits, if the disabled person is incapable of managing their own SSI payments, a representative payee will be appointed to manage the income for them.
Individuals with Disabilities Education Act (IDEA): This legislation, passed in 1990, ensures that all disabled children have access to free and appropriate special needs education, potentially saving parents of disabled children thousands of dollars in special education costs.
Achieving a Better Life Experience Act (ABLE): The ABLE Act is brand new legislation that was signed into law in December 2014. It updated the IRS Code to allow for the creation of tax-free savings accounts for people with disabilities. Any income earned by such accounts will not be taxed.
Understanding these terms and concepts is crucial for parents looking to secure the future and well-being of their children with special needs. For more detailed information, consider reaching out to a New Jersey special needs trust attorney from The Matus Law Group today.
| Term | Definition |
|---|---|
| Supplemental Needs Trust | Ensures lifelong asset access for disabled individuals without affecting government benefits eligibility. |
| Trust Beneficiary | Recipient of benefits from a trust, such as a special needs trust. |
| Trustee/Co-Trustee | Administers the trust, manages assets, and fulfills the creator’s wishes. Often, a financial professional and a loved one serve as trustee and co-trustee. |
| Guardianship | Legal authority to make decisions for incapacitated individuals, like special needs children or adults. |
| Medicaid | US health care program covering medical costs for low-income and disabled individuals, requiring detailed eligibility planning. |
| Supplemental Security Income (SSI) | Government program providing income to low-income disabled individuals, with strict eligibility criteria. |
| Representative Payee | Manages SSI payments for disabled individuals unable to handle their finances. |
| Individuals with Disabilities Education Act (IDEA) | Legislation ensuring disabled children access free and appropriate special education, reducing parents’ costs. |
| Achieving a Better Life Experience (ABLE) Act | Legislation allowing tax-free savings accounts for individuals with disabilities, created in 2014, supporting disability-related expenses without affecting benefits. |
Frequently Asked Questions About Financial Planning for Children With Special Needs
Planning for the future of a child with special needs involves thoughtful consideration and strategic financial planning. Many parents and guardians face unique challenges and may have numerous questions about how to secure the financial well-being of their children. This guide addresses frequently asked questions about financial planning for children with special needs, aiming to provide clarity and direction.
Are there special financial planning considerations if I have two children: one who’s not developmentally impaired and one who is?
Every family’s situation is unique, but having a non-disabled child who will grow up to be entirely independent could result in variations in how you financially plan for the long-term care needs of your child with special needs. This circumstance can impact how you structure your will and inheritances, as your non-disabled child may also serve as a contributing source of income and care for your adult special needs child.
If I have more than one special needs child, do I need to set up separate special needs trusts for each of them?
Having more than one child with special needs likely means you will be stretched even more thinly with regard to your finances, which means preserving your child’s access to government benefits like Medicaid through the use of tools like special needs trusts will be significantly more important. While it’s possible to structure a single trust with multiple beneficiaries, the decision about whether to create individual special needs trusts for your children will depend on your specific circumstances and their needs. If the needs of your two children with special needs are entirely different from each other, it may be more advantageous to set up two separate trusts.
How can I be a positive advocate for my child in the medical system?
The best way to be a positive advocate for your child in the medical system is to ask as many questions as possible, be extremely organized, and be persistent. You should always try to write down and keep records of what you are told and what you learn at medical visits. Write down names and numbers of potentially useful contacts. You will be overwhelmed by information if you try to keep it all in your head.
How can I continue to make legal decisions and care for my special needs child when he/she turns 18?
Despite the special needs of your child, you will not be able to continue making important legal decisions for him or her with regard to things like medical care and finances once they turn 18 unless you take steps to establish guardianship.
What’s the difference between Medicaid and Medicare?
Medicaid and Medicare are both government-sponsored healthcare programs that provide financial assistance for things like medical care. Both are available to people with disabilities. The biggest difference between the two is the eligibility requirements. Medicaid eligibility is based on income and assets and intended for individuals with minimal or no income. Medicare, on the other hand, is open to certain qualifying groups. It is geared towards and mostly used by seniors over the age of 65, but some people under the age of 65 can still qualify for Medicare, such as those with disabilities. These programs also differ in how they are administered and the types of medical benefits they provide.
What happens to remaining funds in a special needs trust if the disabled beneficiary dies before they are depleted?
The special needs trust will allow you to specify what happens to remaining funds if the primary beneficiary is no longer able to collect them. You can designate successor beneficiaries to receive the funds if the primary beneficiary passes away.
What’s the difference between SSI and SSDI?
SSI is Supplemental Security Income and SSDI is Social Security Disability Insurance. While both programs are administered by the Social Security Administration, they provide very different benefits. SSI provides a monthly allowance to disabled individuals with very low income and assets available to them. SSDI does not have any limits on assets or income, but it is generally reserved for someone who worked and paid into Social Security for at least 10 years before becoming disabled, or it can be based on the parents’ work and contributions to Social Security if the potential beneficiary of SSDI is a child who became disabled before the age of 22.
This is just a quick overview of possible questions regarding financial planning for children with special needs. Please keep in mind that this does not constitute legal advice for your specific situation. Given that everyone’s circumstances are unique, it’s essential to consult with a knowledgeable special needs trust attorney who can guide you through the necessary steps to effectively plan and prepare for your child’s care and well-being.
At The Matus Law Group, our experienced New Jersey special needs trust attorney can provide the essential guidance and support you need for effective financial planning as a parent of a child with special needs. We understand the unique challenges you face and are dedicated to creating tailored solutions to protect your child’s financial future. Contact us today at (732) 785-4453 to schedule a consultation.
