I love working with families and helping them ensure their children’s future, there’s no question about that. Although there are special considerations for each family when it comes to planning, there are some additional considerations for families with a child who has special needs. This post was originally one of my weekly fun and informative e-newsletters. I received such great feedback that I thought I would share it with everyone . Feel free to forward this along to families who come to mind, and let them know that we will certainly assist them with their unique situation. And you can sign-up to receive my weekly e-newsletter by clicking here. As a bonus, you will receive my free report “10 Things You May Not Know About Cheap Online Will Software.” Enjoy . . . and share your thoughts via comment below or clicking here!
Every child is special, in their own unique way. That said, certain children are even more precious–and their needs are great. I’m referring to what many call “special needs children” (though, it’s perhaps better to call them children with special needs–after all, they really are “children” FIRST, and not to be defined first by their “needs”!).
Because this is something which adds certain complications to any family, I thought I’d take a moment this week to address 3 key wealth strategies for families with these beautiful, special children.
Planning Your Family’s Wealth Around a Child With Special Needs
Here is the standard thinking, in regards to setting up your affairs with children who have special needs:
Families realize that they have to support these children for the rest of their lives. So, they typically write wills and take out significant term life insurance policies. They are careful to name a trust as the beneficiary, because if their child has more than a minimal amount of assets upon reaching age 18, he/she will no longer be eligible for some government benefits.
However, while these families are indeed on the right track, parents with special needs children also should:
1. Set up a second trust. I am a strong supporter of stand-alone special needs trusts. The purpose of this additional trust would be to make sure that the provisions in the parents’ trust don’t disqualify the child from receiving any government benefits that would otherwise be available for his/her care. It’s better to “wall off” what the child receives. The separate trust is also there so that friends and family members can contribute to the child’s care while the family is still alive–without causing the child to lose eligibility for federal disability benefits.
2. Increase savings. These families need a much larger emergency fund than most, and they also need to create a “reserve fund”. They should concentrate on savings–rather than paying off debt–especially if interest rates on loans are low.
3. Plan for three retirements. These families not only have to plan for their retirements, but also for the child’s long-term care. They should maximize their savings and take an aggressive approach with their portfolio to maximize returns over the long run.
While I’m not a financial planner, I thought that these tips were so important that if you find yourself in this situation, you should raise them with your professional adviser.
Michael Lichterman is an estate planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™. This goes beyond merely planning for finances – it’s about who your are and what’s important to you. He focuses on planning for the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, and family owned business succession – and he is privileged to do so from a Christian perspective. He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.