Clients' FAQs
Here are answers to questions frequently raised by parents and caregivers of children with special needs.
How Financial Planning helps?
Having a special needs dependent means one has to plan for 2 generations—the child and themselves. Considering that the special need may be lifelong, the later years of life can become more painful if not planned for. The recurring expenses related to the child are much higher than in traditional planning. We have seen in many families this expense takes almost 40-50% of the household budget, which puts a very high financial constraint on the family since there are other goals to meet. All these situations demand planning ahead so that, within these financial constraints, the allocation of resources can be more efficient.
We have bought an insurance policy but haven’t disclosed child disability. Is it right?
Whom we can appoint as guardian of the child?
It’s important to give careful thought to who will have responsibility for your special needs child after both parents are gone. While the laws regarding a guardian are not specific to states, this is the individual who will care for your child and manage their affairs when you’re no longer available to do so. A guardian has to be someone who understands the needs of the child well. If he is a non-family member then you may have to involve him/her in your child affairs so that the child’s requirements can be understood well by the guardian.
Ideally, a sibling or a close family member can be appointed as a guardian. However, if not available, family friends can also be appointed as the guardian, provided care is taken to inform them about the child’s needs.
How creating a Trust Will benefit?
In most cases, special needs children are dependent on someone for their decisions. Till parents manage affairs, there is no issue. But when they are not three, then who should look after them for their lifetime, and how to ensure the assets left for the child are actually utilized for his/her benefit are the two major concerns. This can be achieved by the formation of a private trust. It’s a separate legal entity where the assets are not owned by any individual but the trust. The appointed trustees manage the affairs of the trust as per the guidelines laid down in the trust deed. All the income from the assets is utilized for the beneficiary, who in this case is the child. The trustees may change, but the trust remains till the beneficiary is alive.d
How we can ensure the Trust takes care of child needs when we are not there?
The trustees manage the trust affairs as per the rules laid down in the trust deed. So firstly, the trust deed needs to be drafted well in detail and be specific as to how the expenses of the child will be managed, where the corpus of the trust can be invested, how the assets of the trust will be owned by trustees, how the trustees will make decisions, whether any trustee will have veto power, when a trustee can be removed, who can be appointed as future trustees, and various other specifications should be written very clearly.
The second aspect of the formation of a trust is appointing trustees. The viable process for a special needs parent is to have yourselves as the initial trustees. If any future trustee is identified, he/she can be added as a co-trustee. This serves two purposes. One, it helps you in identifying the strength of the trustees you have chosen, and second, it also gives an opportunity to the future trustee to understand the functioning of the trust. Also, create some document like a letter of intent, which has details about your child’s needs and which can be referred to by future guardians when you are not there.
How much corpus we will need for our child care?
To identify what corpus you need for your child, you need to understand your child’s life stages and his various needs. For example, how expenses vary when the child is 3, 16, 22, or above 40 years of age. This understanding will help you in identifying your child’s requirements more appropriately. You can then either plan for child expenses increasing at a defined rate of inflation and identify the corpus needed today. The figure may surprise you because you plan for your child’s lifetime and not for some specific years. These figures will sometimes be very high considering the higher rate of inflation in some of the expenses you incur. The alternative to this strategy is to identify the perpetuity of today’s expenses, which becomes a minimum threshold for you to manage your special child’s needs affair.