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Financial Planning for a Special Needs Child

Posted by: Advisors Management Group in Tips

When you have a child with special needs, you are accustomed to planning ahead. How do you prepare for their future? There is a lot to think about and we are here to help. 

Keep reading, and let Advisors Management Group tell you more about financial planning for a special needs child. Contact us when you’re ready to begin.

Why It’s Important to Make a Plan 

Whether your child is on the autism spectrum, has Downs syndrome, or has a different condition, you know the amount of work it takes to provide a happy life for them. 

As you continue to create a positive presence for your child, you need to remember to set them up for success later in adulthood, after you are gone. 

Financial planning includes everything from the possibility of college and independent adult life to caretaking for them when you are no longer able to. 

No one knows your child as well as you do, so start planning today. 

Things to Remember

When considering financial planning for a special needs child, there are specific items you must remember to include. Taking care of these steps now helps secure your child’s future, especially if you are unexpectedly unable to care for them any longer.

Start With a Letter of Intent 

The very first place to start is to write out all of your thoughts, desires, and wishes for your child in a letter of intent. 

A letter of intent is not a formal legal document, so you have the freedom to draft it in whatever format is most comfortable for you. 

This letter should be thorough, giving clear details about how you intend your child’s life to be after you are unable to care for them anymore. 

A few things you might want to share in this letter include: 

  • Their daily routines
  • Contact information for all physicians and therapists involved in their care
  • Your emotional approach to their care 
  • How much independence you give them 
  • Frequency and schedule of health appointments 
  • List of things your child likes and dislikes 
  • Names and contact information for friends and family that spend time with your child

The information in this letter can be used to draft legal documents later, so it is very important to be as detailed as possible. 

Consider a Special Needs Trust (SNT) 

When you consider your child’s financial future, you may choose to set up a specific type of trust just for their situation. 

A Special Needs Trust (SNT) is a place you can keep all the financial assets, gifts, and money that you have saved up for them – all without disqualifying them from federal benefits like Supplemental Security Income (SSI) or Medicaid. 

This is very important because if your child inherits $2,000 or more in their name, they could become ineligible for those federal programs set up to help them. If the assets from their inheritance are left in an SNT, your child will still qualify for the federal programs. 

Consider an ABLE Account 

ABLE stands for Achieving a Better Life Experience. It is a savings program that is set up specifically for those with special needs. People with disabilities can use the money from this account to pay for qualified disability expenses tax-free. 

Tax credits may apply for those who contribute to ABLE accounts and the first $100,000 is exempted from the SSI resources limit. This means that ABLE account beneficiaries can have some longer term resources that will not disqualify them from receiving public benefits such as assistance for health care, food, and housing. 

Guardianship or Conservatorship

As you prepare for your child’s financial future, you also need to set up a guardian or conservator for them. 

What is the difference between guardianship and conservatorship? This depends on your state. For example, guardianship and conservatorship statutes specific to Wisconsin can be found in Chapter 54 of the updated Wisconsin Statutes. Please seek legal counsel before making the decision. 

Generally, a guardian has the legal ability to make personal, medical, and financial decisions for a person. A conservator usually just has the authority to make financial decisions (like paying bills and investing funds). 

Protect Them in Your Will 

As you set up your will, remember to bequeath your assets to the SNT and not directly to your child. 

If you don’t create and set up a will, the courts default to naming all of your children as beneficiaries, and the assets could disqualify your child from federal programs or aid. 

Even though some types of wills can be created by yourself, work with a lawyer you trust when you have a child with special needs. They will be able to give you sound legal advice and they will know about your state’s current disability laws. 

Set Up Your Child for Independence 

A very important part of financial planning is teaching your child the basics of adulthood and money management. 

What type of job do they want? What type of jobs are best for their skills? Where do they want to live? Think a few years ahead and either work directly with your child or with therapists to help your child develop skills that help them live as independently as they can. 

This is a good idea for kids of all skills and development levels. Discuss things like hygiene, jobs, and paying bills. Give your child the best chance at independenfinancial advisor in Green Bay, WI with as much practice and support as you can give them now. 

Speak to a Financial Planner 

When it comes to financial planning for a special needs child, it is important to think of both present-day and far into the future. 

This is why it is so important to speak with a financial advisor in Wisconsin. They will look at your current finances and help you create a plan that includes providing for all of your children in the best way possible. 

 

Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin.   Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security.  Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses.  Please do not send orders via e-mail as they are not binding and cannot be acted upon.  Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation.  This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services.  Any subsequent, direct communication by AMG  with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides.  A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

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