If you have a special needs child all the financial planning you’ve done might be wasted unless you’ve made that child the center of your plan.
The rules governing Social Security and assisted living homes for the disabled are complex. And this issue is super important. According to U.S. Centers for Disease Control and Prevention, among 8-year olds, 1 in 88 children have some degree of autism. Sadly, that rate is climbing. Ten years ago, it was more like 1 in 110.
And children aren’t the only concern. There are a growing number of adults with similar disabilities too.
So how do you prepare? What is involved with special needs planning? Here are the 7 steps you need to take in order to make sure your loved one will be well cared for no matter what:
1. Write It Up
You may not always be around to communicate what you want for your child. Write it down now. Consider guardianship, education, housing, work and government benefits. I’m not talking about a family trust at this point. This document doesn’t have to be done by an attorney. Just let your vision be known at this stage. You’ll use it as a basis to form your special needs trust later on.
2. Hired Guns
You will need a specialist attorney and CPA. Don’t scrimp here. Make sure your team has expert knowledge with special needs trusts, tax credits, medical deductions etc. Get referrals from friends, social workers and your existing CPA and attorney. Extra efforts spent finding the right team players now will save you untold treasure, time and frustration in the future.
3. Create the Trust
The idea behind a special needs trust is that it will collect and distribute income and assets for your child. This trust allows you to put assets into the trust and at the same time, help your child qualify for benefit programs such as SSI and Medicaid. How? The trust is written in such a way that the government deems that assets held within that trust are unavailable to the child. As such, the child will still qualify for government assistance. That is why you need a specialist and expert when you have this trust created.
4. Do the work
Once you have the special needs trust created you have to make sure all the assets get retitled into the trust. It does you no good to have a trust if you don’t retitle assets. This is a mistake that people make all the time with family trusts as well. Make sure to specifically ask your attorney which assets need to be in the trust and then make sure the attorney either retitles the assets herself or tells you how to do so. Then, a few months later, go back to the attorney with your financial records. List your assets and show the attorney how each one is titled. Ask the attorney to look at your list one more time to make sure nothing has been left out.
5. Update Your Trust Documents
You hopefully have your own trust and/or wills. But you must update those documents as well. Basically, you have to exclude your special needs child from inheriting your assets. This step is crucial if you want her to continue to qualify for government assistance.
Let family know about the plan and ask them please not to gift the children money or assets. Also, make sure they realize why they should not name that child as the beneficiary of their own estate. Have them speak with your special needs attorney. Perhaps they could name the special needs trust as beneficiary of their estate if they want to help out.
7. Learn and Learn Some More
Government programs such as Social Security and Medicaid change all the time. Keep reading and keep yourself updated. This will help you make sure that your plan gets updated as rules change. Don’t count on your attorney to do this for you. She’s got 400 other clients and the one that matters most to her is the one sitting in front of her desk. That isn’t a slight against you. It’s just a fact of life.
At the end of the day, you can take good care of your special needs child if you take these 7 steps. And be smart. Update your plan regularly. Check yourself to make sure you haven’t forgotten anything.
Do you have a special needs child? What steps have you taken? How did you educate yourself?