Parents of a child with special needs know that when it comes to their day-to-day activities, nothing comes easy. Caring for a child with a disability can add complexity to even the most simplistic everyday tasks that are often taken for granted. Tasks such as feeding, grooming, toileting and bedtime routines can be extremely challenging and time consuming. Late nights and early mornings are typical. If your child suffers from a potentially lifelong disability, that means not only do they need help today, but they will potentially need ongoing assistance with these activities for life. Parents like to think that they will be able to help their children forever, but in reality that’s just not the case.
Caring for a disabled child can take a toll on you as a parent physically, emotionally and financially. The responsibilities you face while caring for a disabled child can be overwhelming and are often completely foreign. There is no training book or manual that can walk you through this experience. It takes careful planning and a lot of patience to navigate the day-to-day lives of you and your child.
While it can often feel like it’s you (and your child) against the world, if you’re a parent in this situation it’s important to know you’re not alone. Parents caring for children with disabilities have many different outlets they can turn to for support. The internet can be a valuable tool to help you research and plan. Online support groups are common, convenient ways for parents to communicate and reach out to one another via chat groups and forums. The internet not only helps parents of children with disabilities connect with one another, but it creates an online “community” that brings together parents, children, caregivers and doctors alike. While no two situations are exactly the same, seeing peers not only survive, but thrive under similar circumstances can help you realize that no matter how dark it seems today, there is a light at the end of the tunnel.
Parents often get caught up planning for today and lose sight of the bigger picture. If you’re facing a situation where you know that your child is not going to be able to support and care for themselves independently in the future, what can you do to make sure they will be secure? Special needs requires special planning.
Establishing a Special Needs Trust for your child is a great start.
What is a Special Needs Trust? A Special Needs Trust is a trust designed for beneficiaries who have either a mental or physical disability (a “special need”). In a Special Needs Trust, all assets are invested and managed by a third-party Trustee, which is chosen by you, the parent. The trustee can be anyone you trust to financially act in the best interest of your child; it can be a sibling, family member, friend or anyone else you feel is most appropriate. The choice of the trustee is vital to the “success” of the trust, so picking the right trustee is crucial.
Since the funds are out of the control of the Special Needs Child and may not be used to provide primary care, they may not be taken into consideration when determining eligibility for government programs. A properly drafted special needs trust allows the beneficiary, your child, to enjoy the use of the assets held in the trust for his or her benefit, without unintentionally disqualifying them from essential government programs (SSI, Medicaid, etc.).
A Special Needs Trust may provide care that is not otherwise covered under Medicaid; such as occupational therapy or special education. What about a vacation? These funds can be used to improve one’s quality of life through things like travel and/ or entertainment as well.
A Special Needs Trust is a great custodian of funds for your child, but how are you actually going to fund the trust? One potential solution is a Special Needs Trust funded with permanent life insurance. Purchasing permanent life insurance on your life or the life of your spouse (or both), will provide tax-free insurance proceeds that can fund the trust and provide the financing for the ongoing care of your disabled child.
Utilizing a permanent life insurance policy can help provide you and your family the peace of mind.
To assist you in your special needs planning, you may want a team of professionals to help you plan — such as an attorney to set up the trust, a tax professional to advise you on tax issues, and a financial advisor or insurance agent to help you determine the right type and amount of life insurance to buy. These parties should have expertise in special needs planning and in turn should be able to help you avoid any pitfalls you may encounter along the way.
The use of trusts involves complex tax rules and regulations. Consider enlisting the counsel of an estate planning professional and qualified professional legal and tax advisors prior to implementing such sophisticated strategies. The cost and availability of life insurance will depend on factors such as age, health, and the type and amount of insurance purchased.