Financial Planning for Families with Children with Special Needs
A college education is expensive, but for families with children with special needs, the costs could easily double. I recently spoke with WTNH about some important items parents should keep in mind when it comes to planning their child's future.
The American College of Financial Services in Bryn Mawr, PA estimates that the average cost of raising a child from birth to age 18 is about $250,000. But raising a child with special needs can easily cost double that amount. Having a plan with the right professionals and strategies in place can help parents tackle the unique financial and non-financial challenges associated with providing care for their special needs child.
Assemble Your Team
Working with a team of different professionals can help parents manage both the financial and non-financial aspects of providing care. Consider working with the following professionals:
While family members often provide care for children with special needs, working with a caregiver can help manage the challenges of providing care and addressing everyday responsibilities. Cost will be commensurate with the level of care needed so determining the need will be critical to creating a budget for care.
An attorney specializing in estate planning can help create a special needs trust, which can protect assets for a beneficiary with special needs while preserving their ability to qualify for government programs. Moreover, having an updated will and living will with the names of a guardian and trustee will be important in making sure care is providing for in accordance with your wishes. A letter of intent can also be a helpful document for caregivers. While it is not legally binding, letter of intent can provide an outline of important information such as medical history, family history, information about your child’s preferences and your wishes for the type of care they should receive.
If you provide care to a child or dependent with special needs, you may qualify to take advantage of certain tax deductions for medical expenses, tax credits, and tax-advantaged accounts. For individuals disabled before the age of 26, a 529A account can provide tax-free growth and use of money to improve health and quality of life.
Some financial advisors specialize in working with families that have special needs children or dependents. A financial advisor can help coordinate the services of other professionals on the team while providing specific recommendations on how to fund and protect accounts for disabled dependents.
Consider Available Government Benefits
The Social Security Administration provides two of the largest assistance programs to disabled individuals: Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI). The SSI program provides income for individuals with disabilities that have incomes which fall below certain levels and can be available to children who are blind or disabled as early as birth. The SSDI program provides a benefit for those who have work history but have been unable to work for a minimum of one year. Additional programs such as housing assistance, educational and vocational training, and nutrition assistance are also available.
Take Advantage of Employer-Sponsored Benefits
People often overlook valuable benefits available through their employers such as insurances that can help replace income in the event of a parent’s premature death or disability. Aside from these traditional benefits, other fringe benefits such as flexible work schedules, childcare, and legal services can help families with a special needs child.