for Kids With Special Needs As friends worry out loud about how they’ll pay for their kids’ college education, the parents of children with special needs have worries that extend beyond the few years it takes to get a college degree: • How will we pay for the special therapies our child needs now? • Who will pay our child’s expenses once he or she becomes an adult? • Where will our child live and who will oversee his or her care after we’re gone? These daunting questions and fears stop many parents in their tracks. But creating a plan can ease anxiety, say financial planners. Some of the issues you need to confront are financial: How do you set aside money for your child without affecting his or her government benefits? And some are emotional: Who would understand your child’s needs if something were to happen to you right now? Here are 10 steps to planning your child’s financial future. Some are simple, some are challenging; some cost nothing and some require paying legal fees. Get started on some of these now, so you’ll have peace of mind down the road. 1. Create a Special Needs Trust A special needs trust is the most important part of your child’s longterm financial plan. This is where you can put money that you save, that others give your child as gifts, or that you receive from an insurance settlement without worrying that these funds will interfere with your 26 | savvy kids January 2013
child’s eligibility for federal benefits like Medicaid and Supplemental Security Income (SSI). Even if you’re unable to pay into a trust right now, set one up anyway. This way, you can make the trust the beneficiary of your life insurance policy and your estate, ensuring that those assets don’t get passed to your child when you die. Why wouldn’t you want your child to be the beneficiary of your estate? Because showing more than $2,000 in assets could make your child ineligible for federal benefits such as SSI. 2. Write a Will A will specifies what will be done with your assets after your death. By writing a will, you make sure that your assets are left to the special needs trust and not to your child. Without a will, a probate court judge could name your child as a beneficiary, which could make your child ineligible for federal benefits (see above). The will is also where you can specify a guardian who will take care of your child. When you have a child with special needs, a will should not be a do-ityourself endeavor. Hire a lawyer who works specifically for people with special needs and is aware of your state’s disability laws. Once the documents are drafted, have your lawyer keep one and then give copies to any executors or guardians named in the will. Costs for this legal paperwork, including the will, trust, and powers of
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