Preparing one’s finances can be confusing and challenging for most people. How much should you be saving for retirement? Where exactly should you be saving and investing? What estate planning should you do? These are just a few of the many questions families have. If a family has a child with special needs, however, those questions become infinitely more complex and require careful planning and analysis.
Once the all-important question of “How much money should I plan to leave my child?” has been answered, the next step in special needs financial planning is to determine what assets will be used and when they will be passed on.
What does “special needs planning” really mean? I often speak with people that believe that they’ve completed their special needs planning simply because they established a Special Needs Trust (SNT). Of course, SNT’s are an extremely important component of planning for a loved one with special needs.
Many important benefits are outlined below, but not all. Also, effort has been made to point out important aspects of the programs, but outlining every detailed exception, rule, etc., is beyond the scope of this informational guide. For context, most of these programs are “means-tested,” which means they are usually not available until the child turns 18 because up until that point the parents’ assets and income are taken into account, which is often too high to qualify.
Having a child with special needs can come with all sorts of unique challenges from a financial and estate planning standpoint. Public benefits, for example, can play a huge role in anticipating how much money your child will need down the road in your later years as well as when you've passed away.
Planning a long-term future for a child with special needs can be one of the biggest challenges business owners and their families face. There is often a lot of uncertainty and the whole process can seem quite overwhelming. Having helped countless self-employed professionals through this planning process, here are a few common mistakes I've observed.
Anyone with a child with special needs understands the need to prepare for the future. A trust is always a good place to start, and figuring out a savings goal for that trust is a key part to your planning.