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Protecting the Future of Your Special Needs Child

Parenting a child with special-needs is filled with unique challenges and rewards.  As most parents know, support and guidance are essential to help your child grow.  As the parent of a special-needs child, you know what’s best, and that often means consulting a specialist — whether that be an education specialist, a medical expert or a financial professional.  There are many important steps your family must take over time to plan for the success of your child’s current and future well-being and education.  For families with special-needs children, this can be a complex task navigating the multitude of special services while formulating other long-range financial goals like saving for retirement, buying a new home and/or paying college tuition for your other children. 

But it’s not practical to begin planning for your special child’s future before getting your own financial house in order.  Developing a plan for your successful retirement and other long-term financial goals is a critical first step.  Taking this first step is equally important to the success of both your financial goals as well as the longer-term well being of all your children.

The many variables in formulating this long-range view are significant and often complex and a complete overview of all the key planning variables is beyond the scope of this general discussion.  Your plan will look different depending on how many children you have, your available family resources now and in the future, your knowledge of all the local special-needs programs, and whether you’re entitled to receive possible government assistance.  

When your special child reaches an age of maturity and is no longer eligible to receive school-related benefits and services, a multitude of new challenges can arise.  Often times there are long waiting lists for services and navigating your options can be challenging, so it makes sense to plan ahead.  Some of these new issues may include a change in your child’s ability to receive government assistance after he or she leaves school or finding independent housing.  If your child is unable support themselves, then understanding government assistance and expected living expenses becomes paramount.  You may also be forced to deal with another difficult — and often emotional issue —guardianship.  

For many special-needs young adults, there needs to be some mechanism in place to determine who has decision-making control and support for a wide variety of issues.  To create an official plan and guide for the future, the services of a legal professional often go hand-in-hand with those of a financial professional, especially when it comes to your estate planning.  One of the most important things an attorney can help you do for your child’s future is to create a comprehensive Letter of Intent.  This is a living document that is flexible enough to meet your child’s changing needs while expressing your thoughts and desires about your child to future caregivers.

If you believe establishing a will is sufficient security for your special-needs child, you may be mistaken.  A standard will that assigns assets could prevent your beneficiary from receiving government assistance that may be essential for the level of care he or she requires.

One of the more critical components of any plan for your child’s future welfare is the special needs or supplemental trust.  Through Social Security and Medicaid, the government subsidizes certain services to help care for special-needs individuals with demonstrated financial need, but there are strict eligibility requirements.  A special needs trust allows you to circumvent income limitations imposed by the government.  Assets left in a special-needs trust are managed by a trustee, who in turn nominates your child as beneficiary while maintaining absolute discretion regarding expenditures from the trust.  The trustee can use the assets to pay for necessary services not funded by other sources as well as activities that enhance quality of life — like a haircut, a night at the movies or even a vacation.

The trustee you assign to a special-needs trust should be a person who is not only trustworthy, but also competent to manage finances and follow complex and ever-changing government guidelines. In some cases, parents may choose a co-trustee or an advocacy organization as a trustee to ensure continuity of service over time.  It’s a big responsibility, which is why some parents ultimately turn to a financial or nonprofit institution that specializes in trusts to serve as the child’s trustee.

If it appears that the scope and complexity of caring for your special-needs child appears complex — it is!  However, it is certainly not insurmountable.  The financial planning process for your situation is still the same as it is for most families; it just has a few more constraints and needs to encompass a longer planning period.  In order to be best prepared for the future, one must take into consideration all family members. 

There is no better time than the present to begin the process of planning for both your own financial future and that of your special-needs child.  A comprehensive approach to financial planning is much more than end-of-life estate planning — it is preparing your family to navigate life and all its challenges and opportunities.  Take time now to gather a team of experts so you can feel more confident about your family, your retirement, and the fact that your special-needs child will receive the appropriate level of care even in your absence, whenever that may come.

Thomas D. McCandless is a Chartered Financial Analyst® and financial advisor for Ameriprise Financial Services, Inc. He has been an advisor to families and institutions for more than 25 years. He and his wife are parents to two children — a 17-year old son and a 14-year old daughter with multiple disabilities.


Ameriprise Financial and its representatives do not provide tax or legal advice. Consult your tax advisor or attorney regarding specific tax issues.

Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients. 

© 2011 Ameriprise Financial, Inc. All rights reserved.

File # 126923 (10/2011)



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