Planning for the Financial Future of a Child with Multiple Disabilities
by Steve Morris
If you're worried that your child will not be capable of full employment due to cognitive or other limitations in addition to blindness, you are probably facing a dilemma. Most parents want to provide some kind of financial support for their child after they are gone—whether deceased or disabled themselves—since most government benefit programs such as Supplemental Security Income (SSI), Medicaid, Social Security, etc., are insufficient for providing the quality of life most parents want for their child. So they naturally think about leaving some funds to their child to offset the quality of life deficit that usually exists.
Unfortunately this is where most parents discover a dilemma: any funds above $2,000 left to a child will generally disqualify that child from receiving SSI and Medicaid benefits, the two primary benefits that support our multiply disabled children. So what is a parent to do?
There is a perfectly legal way to leave substantial funds for children with special needs while still maintaining eligibility for the various government benefits so critical to their welfare and quality of life. The now generally accepted way of doing this is to set up a legal device called a "special needs trust" (SNT) which not only allows continued eligibility for government benefits but also provides additional benefits such as added security for the funds, professional money management, and protection of the funds from creditors and lawsuits against the child.
Once such a trust has been established the parent or anyone else (grandparents, siblings, aunts, uncles, etc.) can now leave funds to the trust, which will then make payments for the benefit of the child. The person or company who manages the trust funds (known as the trustee) must have complete discretion to make payment decisions on behalf of the child.
So then, should all parents just establish a SNT for their child, which will then take care of everything? You might be thinking that it can't be that simple and if so, you would be right. There are actually 12 total steps that parents should take (including establishing the SNT).
Why Would We Want a Special Needs Trust for Our Child?
The following are some of the common planning issues and goals that many parents of children with multiple disabilities have:
- To provide for lifetime supervision and care since someone else will need to step into the role that most parents fill during their lifetime.
- To maintain all government benefits that provide for basic living expenses (SSI, social security) and coverage for medical care generally with Medicaid.
- To guarantee "supplemental" funds are available so that a meaningful quality of life is maintained.
- To provide for a long-term strategy to safely invest and manage whatever funds are left to the SNT for the life of your child.
- And finally, to avoid the family conflicts that can arise when other children and second families are often involved in the family dynamics.
Now we will look at each of the 12 steps that parents need to focus on to assure that they have comprehensively (through a Life Plan) examined all aspects of their child's future care needs before they can finally establish and then fund their child's SNT.
For those parents who simply want to get an idea of where they stand regarding their existing plans please take the time to review the Life Plan Checklist.
CAVEATS AND DISCLAIMERS:
The information provided here is not intended to be exhaustive on the subject of special needs planning. Entire books have been written on this subject so the objective here is more limited in scope. It is our intention to provide sufficient information so that parents have a general understanding of the main issues involved and then know what steps need to be taken to achieve their goals for their child by creating a Comprehensive Life Plan. Where legal terms and devices are discussed such as special needs trusts, wills, guardianship, etc., it should be understood that this is not intended as specific legal advice and accordingly, each family is always advised to obtain appropriate legal counsel when implementing these elements of a Comprehensive Life Plan for their child with special needs.
Re: Planning for the Financial Future of a Child with Multiple DisabilitiesPosted by Judith Lesner on 9/16/2008 at 9:35 AM
Found this article very informative and helpful. I am wondering if this is a place for parents to ask questions or for clarification.
Re: Planning for the Financial Future of a Child with Multiple DisabilitiesPosted by kwolffe on 9/18/2008 at 6:45 AM
Steve, Thank you for posting this information about financial planning. When I heard you speak in Omaha, I was impressed with the many parents in the audience who asked such great questions and I hope we'll see some of those concerns surface here.
I do have one question for you: What do you think parents of children without multiple disabilities ought to do with regard to their children's financial futures? Do they need to do something like a Special Needs Trust or is a standard will or trust fund preferred? Looking forward to hearing from you, Karen
Re: Planning for the Financial Future of a Child with Multiple DisabilitiesPosted by samoldest on 9/18/2008 at 2:03 PM
Parents of children without multiple disabilities will generally face the same problems if they desire to maintain their child's access to government benefits such as Medicaid and SSI. Standard wills and trusts will generally still require a "spend down" of assets before the child can regain eligibility for benefits. So the Special Needs Trusts is again often the best answer for holding their child's funds.The number of disabilities is not the main issue but instead whether the child needs government support and health care services such as SSI and Medicaid.
Re: Planning for the Financial Future of a Child with Multiple DisabilitiesPosted by samoldest on 9/18/2008 at 2:04 PM
Yes, parents should feel free to ask questions of a general nature or if they need clarification of something. For more specific questions of a personal nature they should contact me directly at "email@example.com" and I will be happy to try to answer their questions or point them in the right direction.
Re: Planning for the Financial Future of a Child with Multiple DisabilitiesPosted by Caroll on 10/15/2008 at 3:08 PM
Who is an appropriate lawyer on the South shore of Boston?
Re: Planning for the Financial Future of a Child with Multiple DisabilitiesPosted by samoldest on 10/15/2008 at 5:06 PM
I don't know of a specific lawyer in your area so I would suggest you do one or more of the following. First, ask some friends who have a special needs child for a referral if they have already completed their planning. Or if you have one, ask your financial advisor or planner for a referral. Next, you might check with your area bar association for referrals to lawyers with this kind of expertise. And finally, check out the "SPECIAL NEEDS ALLIANCE OF ATTORNEYS" at their website ("specialneedsalliance.com") or at 1-877-572-8472.
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