Unfortunately, neither health insurance nor Medicare covers long-term care. Medicaid could become your only option, so do what you can to plan ahead.
If you have a friend or a family member that has special needs, you already know that there are often day-to-day challenges that exist alongside the love and care they require. What some families don’t know is that there is a greater urgency to craft a solid financial and estate plan when your family has a loved one with special needs, especially a child. And often, even the most diligent parents or guardians quickly realize there are numerous planning issues they aren’t aware of.
Disabilities and special needs requirements are often viewed as statistics. For example, one out of nine children under the age of 18 receives special education services, and nearly 21 million families have a member with special needs. One of the major challenges of raising a child with special needs is the strain it puts on family finances. Some equate it with tuition — but tuition for life. While government aid helps, it often covers just the necessities. Many parents want more than that for their children, and for those who want more, financial planning — specifically special needs financial planning — provides the structure and guidance they need to successfully navigate the financial challenges of raising a child with special needs. Nearly one-third of parents with special needs children commit more than 40 hours a week to care. Further, they spend an average of $326 per month on out-of-pocket medical expenses. It is surprising that they’re not planning long-term for the financial needs of their child.
Here are four things parents of special needs children can do to create a more financially secure future for their special needs child:
- Prepare for age 18 – When a child becomes 18 years of age, he or she is legally presumed competent to make their own medical, financial, and educational decisions. For parents of special needs children, there are two options they can pursue to maintain influence in their child’s care: power of attorney (POA) or legal guardianship/conservatorship. This would be applicable if the child is mentally competent to sign the document. When turning 18, a child may become eligible for public benefits. It is important that parents understand the procedures and plan to ensure their child continues to receive the support and care he or she needs in their adult years. If a POA is not an option, then the parent will need to consider guardianship/conservatorship over their child.
- Draft a last will and testament – A special needs individual who has more than $2,000 in their name may become ineligible to receive certain public benefits. Therefore, it is important for parents of special needs children to declare how their estate is distributed upon their death. An estate planning attorney can work with you to prevent automatic asset distributions to your special needs child.
- Create a special needs trust – The special needs trust is a means to provide stability and security for special needs children should something happen to their parents or guardian. It can be a supplement to public benefits, which can greatly improve the beneficiary’s quality of life.
- Choose an appropriate trustee – There are typically two choices when it comes to selecting a trustee: a professional trustee or a family member. The appeal of a family member is that that person doesn’t charge fees and usually has intimate knowledge of the beneficiary’s needs. However, administering a trust is a complex and important responsibility. A professional trustee has experience in the financial management – investments, tax planning, and record-keeping – required by the execution of a trust.
Make sure your family is prepared not only for today, but for the future. The quality of life of the parent as well as the quality of life of the special needs individual could depend on how you plan today.
If you’d like to discuss your particular situation, please don’t hesitate to reach out. Please contact our Cincinnati office by calling us at 513-771-2444 with any