Financial Planning for Special Needs Parents 101, Part I

special needs parents

Whatever the nature of your child’s disability, one of the most important things you can do to ensure that you will always be able to provide for their needs is establish a comprehensive and meticulous financial plan.

However, special needs financial planning can be incredibly complex, challenging, and discouraging if you don’t have proper guidance or a basic knowledge of the extensive nomenclature and concepts involved in the planning process.

As we continue our blog series on basic estate planning for parents with special needs children, in this section we will seek to introduce you to many of the basic planning terms that every special needs parent should be aware of.

Please keep in mind that this blog does not constitute legal or financial advice for your specific situation, and it is simply meant to serve as a brief educational introduction to special needs financial planning. Check back soon for Part 2 of this blog where we will address some wide-ranging FAQs on the subject.

For help analyzing and making a plan for your own unique situation, please contact The Matus Law Group today.

Terms & Concepts

Supplemental needs trust — Also known as a “special needs trust,” this is one of the most commonly utilized financial planning tools for ensuring 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 whomever receives the benefits from a trust, such as a special needs trust. In the case of a special needs trust set up by a parent of 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.

Once again, this is just a brief introduction to some important terms and concepts regarding financial planning for parents with disabled children. To learn more or to get started with your estate planning today, please contact The Matus Law Group. Be sure to check back soon for Part 2 of this blog where we will address some wide-ranging, common questions to help educate parents of special needs children on the most important aspects of the financial planning process.

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Christine Matus

Christine Matus