Written by Laura Bogart and Edited by Chris Cluff. Featuring Stuart H. Schoenfeld, Partner at Capell Barnett Matalon & Schoenfeld LLP.
Parenting a child with disabilities is one of the most powerful and important jobs anyone could do. You want to protect your child in every way possible, ensuring they stay safe while enjoying a full world of potential. But keeping the world open to your children takes a lot of planning for the long-term future — including the day you’re no longer there to advocate for them directly.
While all parents must consider their children’s best interests should the unforeseen happen, disabled children’s parents must approach estate planning with additional preparation and care. Special considerations must be taken when considering everything from who will look after their kids to how to cover their expenses.
GOBankingRates talked to several financial planning and estate planning experts to learn to make a difficult process even a little easier.
Have a Long-Term Guardian Picked Out
Though having someone else raise your child and even care for them into adulthood seems unimaginable, a long-term guardian is one of the first aspects you must plan for.
According to Dave Jones, director of estate strategy at Bailard, “This individual should be familiar with the child’s specific needs and situation and [be] capable of making decisions in the child’s best interest.”
Beyond making major decisions around a child’s care or schooling, guardians should be sensitive to the child’s lifestyle. As a partner for special needs family law at Capell Barnett Matalon & Schoenfeld, Stuart Schoenfeld has words of wisdom for families looking to preserve continuity in their child’s life.
“It is important to ensure the child can still engage in familiar social programs and trips they may enjoy,” he said. “It is [also] important that whoever is caring for the disabled child is aware of and able to continue that child’s standard of living once the parents are no longer able to do so.”
Establish a Special Needs Trust
Part of protecting your child means protecting them financially. Jones said that setting up a special needs trust (SNT) is one of the best ways to accomplish this goal – without jeopardizing their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).
“Funds in the trust can be used to supplement the child’s needs not covered by government assistance, such as education, therapy, transportation, and recreation,” Jones said. “This trust should be managed by a trustee who understands the child’s needs and can ensure the funds are used appropriately.”
Jones also suggested naming several people to serve as trustees, in succession, reducing the possibility of a vacancy in the trusteeship.
“To further protect the disabled child’s financial interests, parents can also consider naming a committee of individuals (perhaps siblings or other family members) in the SNT who can remove and/or replace the serving Trustee,” Jones said.
Create a Letter of Intent
Helping that guardian give your child the best quality of life can start with a detailed letter of intent. That letter outlines essential information like your child’s medical history, preferences and daily routines.
“This document guides the trustee and caregivers, ensuring they understand the child’s needs and preferences,” Jones said. “In this letter, parents can include information regarding community resources available to their child, including contact information, specific services, and any additional helpful information.”
Consider Multiple Financial Resources
When planning your child’s financial future, you should know about their available options. Families of disabled children can look into ABLE accounts or tax-advantaged savings accounts that fund disability expenses.
According to Schoenfeld, these accounts can help pay for the typical day-to-day expenses of a disabled child, including food, education, housing, and healthcare.
Jones also suggested potentially purchasing life insurance as additional support for the disabled child.
“Proceeds from a life insurance policy can be directed to the special needs trust,” he said, “providing a source of income for the child’s long-term care.”
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