Special Needs Planning — The Basics about Preparing Financially for Your Child

In 2000, the U.S. Census revealed over 20 million families had a family member with a physical or mental disability. That number has increased in the intervening 20 years, and each family requires ongoing, differential care for those members. Fortunately, medical advances have empowered families to take the necessary steps to provide that care as needed.

In many cases, there are opportunities for children with special needs to transition into adulthood successfully developing lifelong careers. When those careers aren’t enough or simply aren’t available for your children, Members Trust Company can help. We’ve created a set of resources that can help parents effectively plan for their child’s future. Below, we explore the different considerations that your family may face over the years.

Timeline of Important Dates

Every person goes through many stages in their life. Each phase offers different opportunities and challenges; special needs children are no exception to this rule. To help you gain a better perspective about what is involved at each point, we’ve separated the primary objectives that you will need to accomplish at each stage.

• Early Childhood - Your children are a gift, and from the moment they’re born, they depend on you to take care of them and provide the nutrition and education they’ll need to develop. Special needs children are often diagnosed during this early stage, which can reveal that your child may need more care, attention and support. During this time, your child is likely to enter school and may have significant medical considerations that can bring many additional expenses.

• Teenage Years - As your child grows, you begin to get a better idea of what the future may hold. Will the medical costs remain constant, or does your child’s condition require additional support as they grow older? Depending on the type of special needs your child has, you may need to plan for a more significant amount of savings to address those needs. You will also need to explore what programs and assistance options are available to your family so that you can lean on those benefits as you provide for your child.

• Eighteen Years Old - When your child turns 18, they are no longer a minor in the government’s eyes. This status change means that some doors will close, but others remain open. You may be able to receive additional support as you provide your child with the added care they need during this important transition time. Over the next few years, you will have to determine what occupational opportunities may be available to them, as well as the degree of care they’ll need as an adult. Your other children may start to take a more active financial role in helping to support your child with special needs.

• Twenty-two Years Old - The government closes access to many support programs at this age, and you will need to prepare for this adjustment. If you’ve planned accordingly, the next few years are likely to be a time when you’re relying more on the money that you’ve saved up and invested for this period. It’s also the time when you will begin planning for those years when you won’t be able to personally care for your child as you advance in years. One complication to consider is that Medicaid and Supplemental Security Income (SSI) - needs-based government resources for families and disabled individuals with limited resources - may not be available for your child depending on your income or inheritance. In that case, you must ensure that you have arranged for long-term health insurance to offset the common costs associated with managing a disability, particularly if that disability prevents your child from holding a job.

  One helpful tool to maneuver around this limitation and ensure your child remains eligible for Medicaid is to establish a Special Needs Trust. This trust employs a third party to administer your child’s inheritance and assets for decades, allowing you to give them the assets they need without disqualifying them from essential assistance programs.

• Early Adulthood through Middle Age - As your child navigates adulthood, they’ll continue to depend on the efforts and planning that you’ve conducted in the previous decades. During this time, you must ensure that your assets are in line for your retirement and plan for the increased medical expenses that you may encounter over the next several decades.

• Parents’ Retirement and Death - When you exit the workforce, your finances are likely to be stretched to their maximum extent. If you aren’t prepared for this transition, it can be an uncomfortable time as your family scrambles to make ends meet and ensure that everyone gets the care that they need, including your special needs child. Therefore, you should be planning for this transition many years in advance, setting aside the resources that you need to build upon to provide for your child’s adulthood and their eventual retirement.

At each stage, different opportunities are available to you depending on where you live and your financial status. Conversely, different special needs involve higher costs and may impose greater challenges on your family. The above periods are generalized, but you can consult medical specialists and developmental psychologists to get a clearer image of what your situation may look like at each of these stages.

The Resources Available to Help Your Family

Fortunately, you don’t have to take this journey alone. Special needs financial planning connects you with experienced advisors who can provide valuable advice at every step. From the specific investments that you should make to the potential tax benefits and government assistance programs that your family may be eligible to receive, your advisor can provide essential insights that will serve your family for decades to come.

A special needs financial advisor is uniquely situated to provide help for your family during the most sensitive times. When you consider the additional costs involved in providing ongoing medical care alongside planning for retirement and continued financial support, it can seem overwhelming. Your financial advisor can provide the objective perspective needed to determine how your financial goals should look and how you can achieve them. Members Trust Company can help you create a plan and establish a Special Needs Trust that will continue to look after your child even if you’re no longer there to take care of them.

Trust and investment products are not NCUA/NCUSIF/FDIC insured. May lose value. No financial institution guarantee. Not a deposit of any financial institution. This is for informational purposes only and is not intended to provide legal or tax advice. For legal or tax advice, please consult your attorney and/or accountant.