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Financial Strategies for Your Child with Special Needs

Even the most well-adjusted, optimistic people struggle with being able to communicate how difficult it is to be the parent of a child with special needs. Saying that parenting a child with special needs is daunting is a profound understatement – at least it was for me. During the early years, as parents of children with special needs, we face an especially challenging day-by-day, task-oriented, emotionally and physically draining reality.

That reality is a collection of unique challenges, including navigating the diagnostic landscape; finding proper school or residential placements and developing a strong network of supporters. Even when we have moments of mastery, the underlying truth is that we cannot predict the future, and therefore parents need to put in place a structure to ensure that our children are protected – whether they are diagnosed with a special need at a young age, or they are challenged later in life.

Liz Kinstlinger

Liz Kinstlinger

Beyond the idea of protecting our children from the downside of not having enough long-term resources, we also have the responsibility to position them so that they can benefit from the medical advances and potentially game-changing technologies that could change their lives, even when we are no longer around to watch them thrive.

Let’s Get Started

There are various seamless strategies parents can use in an effort to assure financial security. As a starting point, I believe that a qualified financial professional can help you determine whether your child qualifies for government benefits, such as Supplemental Security Income (SSI) and Medicaid.1 These programs are designed to provide funds to supplement basic necessities such as food, clothing and shelter. However, it’s important to understand that if a child has more than $2,000 in assets in his or her name, they will not qualify for these programs. So if someone leaves your child an inheritance or other monetary gift directly in their name, the government could freeze that child’s benefits.

Often when I meet with parents, their first reaction is that they cannot afford to fund a trust because their day-to-day expenses are already too high. They are immediately relieved to hear that the trust can be funded by life insurance policies, which are generally a necessity anyway. These policies can be designed to accumulate cash values and generate even more protection for their child.2 It is a win-win strategy.

Choosing a Trustee

In addition to choosing a guardian, determining who your child’s trustee will be is a critical decision. A legal guardian is a person who is entrusted to make decisions on behalf of a child in the event that the parent is no longer able to make such decisions. The trustee is the person who will be responsible for managing the special needs trust after your death. It can be a family member, a friend, an independent professional trustee, or even a bank or a lawyer. The trustee ensures that the money in the trust is spent only on your child and only on services that you have specified or that are appropriate to your child’s needs. The trustee also supervises how the money in the trust is invested. The guardian – who should not be the same person as the trustee – cannot spend any money in the trust without the trustee’s approval.

Preparing a Letter of Intent

A letter of intent is an important planning tool for parents of children with special needs, including adult children, and may also be useful when planning for minor children who are not expected to face special challenges.

No one else knows your child as well as you do, and no one ever could. You are a walking encyclopedia of your child’s history, experiences, habits, and wishes. If your child has special needs, the family’s history adds a helpful chapter to your child’s narrative, one detailing your child’s unique medical, behavioral and educational requirements.

What would happen if you suddenly became unable to provide your child with the necessary supports your child needs? Without you, your child would become dependent on other caregivers who simply do not possess all of your personal knowledge and insight. However, there are steps you can take now to help minimize the natural disruption and disorientation that will occur upon your death, or if you become unable to care for your child during your lifetime.

Some of the Nuts and Bolts

The letter of intent may be addressed to anyone you wish – for example “To Whom it May Concern,” “To my Guardian(s), Trustee(s) and Executor.” At minimum, the letter should address the following points: general overview, daily schedule, food, medical care, education, benefits received and employment.

In addition, there should be information included about your child’s residential environment, social environment, religious environment, as well as behavioral management plans and final arrangements.

Once you prepare, sign and date the letter of intent, you should review the document annually and update it as necessary. It is important that you let both the legal guardian and trustee, as well as the caregiver know that the letter of intent exists and where it can be accessed. Even better, you can review the document with the caregiver on an annual basis. The letter of intent should be placed with all of your other relevant legal and personal documents concerning your child.

Paving the Road Towards a Secure Future

Understanding these four essential tools can help start your child on the road to security, while also possibly providing some peace of mind for you as parents, because you have addressed the uncertainty of the future.

This communication is written by and presented to you by Elizabeth Kinstlinger, Agent with New York Life Insurance Company. The writer is solely responsible for the content of the article, which may not represent the opinions of New York Life insurance Company or its affiliates.

For more information, please contact Liz at ekinstlinger@ft.newyorklife.com or (917) 533-0284.

Footnotes

  1. Neither New York Life Insurance Company nor its agents or affiliates provide tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
  2. Provided the premium requirements are met and paid.

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