In general, all parents worry about their children future. How will they provide for their child education, how to give them a quality life and many others questions hovers around them. But when there is a child with special needs the concerns extend beyond the college education or marriage.
- Where will the child reside when parents are not there?
- Who will pay for child life care expenses?
- Who will ensure the child adapt to the changing environment?
- Once an adult who will take care of the child changing needs
The above concerns are primary for parents with special needs children. When these remain unaddressed it becomes hurdles for the family to plan for their future. By drawing a proper financial plan a special needs child-parent can reduce some of the worries.
Here is an 8 step action plan for the family to plan for their financial future. Some of these action plans would require some cost to bear such as legal cost. Contrary to this some action may demand adjustment in life which is always a challenge. Even with these, it’s important that families start thinking on these lines.
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Write a Letter of Intent
It’s not a legal document but surely a guiding resource for future caretakers. This document passes on the vital information about your special needs child to the future guardian/trustees. Parents should write here about child daily living, his behavior, likes and dislikes, education, professionals, and institutions etc. Even a person child is uncomfortable with can be included. Once in a year update this letter for change in any of the information it includes.
2. Create a Will and Trust
A Will is necessary to ensure the assets you leave for the child are bequeathed to the trust. Moreover, for child minority, parents can appoint a guardian through the Will. Simultaneously a trust ensures the protection of assets for your special needs child. The money you will save or the gift/inheritance received by the child can go directly into the trust. Forming the trust today even if you are not able to fund it will benefit. The life insurance can be assigned to the trust and your estate can be bequeathed to t when you die.
3. Identify The Guardian and Trustees
The guardian has a responsibility much like you. He will have to make an adjustment in his own life to ensure the special needs child care is continued without any hurdles. If you have identified such person appoint him guardian in your will till the child minority. The consent of the guardian is important. Similarly, trustees are persons who will ensure the trust assets are utilized for the benefit of the child. Hence identifying trustees who can act in a fiduciary role is important and should be done today.
4. Estimate The Lifetime Cost of Special Needs Care
Identifying the cost for the lifetime care of the child is necessary. This cost should cover not only the financial requirement but also the legal aspect. The financial assessment is possible only when parents have an estimation of the child’s expenses. Most do not have it as it is part of the family expenses. It then becomes ideal to create a budget and identify the child’s expenses separately to bring accuracy in estimating the lifetime cost. Apart from this, any cost which may be incurred for addressing uncertainties in life should be taken into consideration and included.
5. Identify Available Support
Parents need to understand the support their child will receive from the government, family members, relatives, friends, and others. Analyze all such support and start preparing for the shortfall. Most importantly account for the benefits child will be received in actual.
6. Start Investing
The insurance will not be available after a certain age and may not be enough otherwise. That’s where your personal savings will be important. Start setting aside some amount for building a corpus for your special needs child. This corpus may be needed for multiple expenses which may include legal cost, professionals and funding expenses in later years of life.
7. Identify Residential Needs For Special Needs Child
When the child turns an adult then the need for a residential house arises. It may be separate from your existing one or you may have to adjust it. As the child reaches 15-16 years start thinking about the residency requirement. Where he will live after you, is your locality equipped with programs for special needs adult. If your child has to be independent you search for options.
8. Talk To family members and future caretakers
It’s important that family members are aware of your special needs child requirements. They will be the ones who will be a guiding support after you. Talk to them and discuss. Also, they need to be educated about how things should be done if they wish for your child. Gifting any amount should be to the trust and not to the child. Similarly, consent of all future caretakers is necessary along with their understanding of your child needs. Parents should talk to the identified persons to ensure they are in sync with your vision for the child.
Lack of information forces families to avoid planning. But it’s important that families take this step and early in life as wealth building needs time. Lastly, if all of these look tough to plan hire a financial planner who is well conversant with special needs requirements.
The article first appeared in The Financial Express