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Planning for Your Child with Special Needs

One of the most challenging issues facing parents of children with special needs is planning for their child’s future without them. Planning the finances for a child with special needs deserves special attention from the child’s parents, grandparents and other relatives. With ever-changing laws and legal procedures, it’s important for families to regularly revisit their financial plans to ensure their child with disabilities is well prepared for their future.

Stephen A. Ehrens, CPA, CLTC

Stephen A. Ehrens, CPA, CLTC

Careful planning is necessary to preserve eligibility for most publicly funded disability related programs, especially as the child reaches the age of majority (usually 18 years of age). Maintaining eligibility for basic government programs is important. As well, the family should understand that government benefits likely will not meet all the child’s needs.

Special Needs Trusts

It is important to know that an inheritance may cause many problems for the child. An inheritance worth as little as a few thousand dollars could disqualify an individual with disabilities from most federal benefits, such as supplemental security income (SSI) and Medicaid, as well as some state programs. This is an enormous loss for many, reports the National Information Center for Children and Youth with Disabilities (NICHCY), since critical services such as supported employment and vocational rehabilitation services, group housing, transportation assistance and personal attendant care could be jeopardized.

An effective estate plan would include a special needs trust – a legal document in which the family leaves chosen resources, such as money or property, to the trust. It is managed by a trustee on behalf of the person with the disability, who is given absolute discretion to determine when and how much the person should receive. There are many types of special needs trusts that serve different purposes and laws affecting trusts vary state to state. It is imperative that the family work with a knowledgeable attorney and a financial professional.

Funding the Trust

For some families funding a trust may require a reallocation of the assets they already have, while others may seek more assets to allocate. In this case, permanent life insurance may be a solution. Building a proper roadmap for all of the family’s financial goals is extremely important. Grandparents and relatives may consider estate planning as an effective way to allocate assets to their loved one with special needs. Instead of designating their relative as a direct beneficiary, proceeds are left to the special needs trust.

Planning Considerations

There are important considerations parents can make when planning the financial future for special needs children. Here are a few suggestions:

Prepare, review and revise legal documents. Parents should regularly monitor legal documents such as wills, trusts, power of attorney documents and healthcare proxies to make sure they are relevant and properly worded.

Develop a clear vision of how you want your child to live if both parents are no longer around. The family’s planning efforts reflect their hopes, dreams and aspirations for their loved one.

Develop a written Letter of Intent that will assist future caregivers. Having a blueprint that provides vital information regarding the child’s physical and mental status, likes and dislikes, medications, history, etc., will be invaluable to future caregivers… and the child.

Surround yourself with a team of knowledgeable professionals who have experience working with families with special needs. Core members of this team should include an attorney, a social worker and a financial professional. Together this group can help you manage the legal, government benefits, and financial solutions for your loved one with special needs.

Provide funding for quality of life for a lifetime. Special needs trusts should be regularly checked to make certain that they are adequately funded for quality lifetime care and quality of life.

Resources for Parents

There are many government and non-profit agencies to contact for more information on planning for the financial future for dependents with special needs and related issues. Following are some starting points for identifying local contacts:

  • National Care Advisors – A consulting firm that provides quality of life planning necessary to meet the challenges of living with special needs.

Whether a family has substantial means or few assets, a young child or adult child with disabilities, planning for the financial future of a loved one is critically important. The fact is, how parents and the child’s family leave their assets after death may greatly affect the quality of life for their family member with special needs.

Article prepared by Northwestern Mutual with the cooperation of Stephen A. Ehrens. Stephen A. Ehrens, CPA, CLTC, is a Financial Representative with Northwestern Mutual Financial Network, the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company (Northwestern Mutual)(NM), Milwaukee, Wisconsin, its affiliates and subsidiaries. Stephen A. Ehrens is an insurance agent of NM based in (Fairfield, CT). To contact Stephen A. Ehrens, please call 203-256-2162, e-mail him at, or visit his website at

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