Parents of children with special needs must plan for the years ahead in important ways. Here’s where to begin.
Parenting is challenging no matter what. But as Nicole Johnson of Port Washington in Nassau County puts it, “parenting a severely disabled child is just very different. Our concerns are not ordinary.”
Johnson’s daughter, Josie, 7, has FOXG1 syndrome, a neurological disorder caused by a mutation in the FOXG1 gene. “I worry about lifting her as she gets older,” Johnson continues. “She’s 50 pounds, and it’s getting very hard.” Josie could have a life-threatening seizure at any time, and so “it’s critical she is always with someone. I worry about her care,” shares Johnson, who is a co-founder of the FOXG1 Research Foundation.
Johnson’s worries about how her child will be taken care of when she’s no longer able to do it are likely familiar to many parents of children with special needs. Exactly what legal and financial steps need to be taken to ensure your child’s care and well-being down the road will be dictated by the specifics of your family’s situation and your child’s diagnosis.
A one-size-fits-all approach doesn’t exist, but consulting with an attorney who specializes in estate and guardianship law to discuss your unique situation is an essential step. Seeking the guidance of a financial planner with expertise in family matters could also be necessary. When selecting these professionals to work with, a consideration second only to related experience is rapport. Given the personal, emotional nature of the topics you’ll be discussing, it’s important you feel very much at ease with him or her. If you enlist a large firm, make sure that the person you first met with and liked is actually the one who will be working with you through the conclusion of the process.
When you’ve selected your planning “team,” prepare to discuss these key points, and go to your initial meetings with a list of specific questions in hand.
Is Social Security Income (SSI), Social Security Disability Insurance (SSDI), Medicaid, or any other state or federal benefit available to your child, and what are the respective qualifications to receive them? This is the first thing to look into, and ask your attorney about, says Wendy Gildin, a special education lawyer in Garden City.
Income and Asset Limitations
Is there a limit to how much money your child can have in his or her name in order to receive the maximum amount of available benefits and services? “The answer is yes for many. For example, to qualify for SSI, your child must have less than $2,000 in assets,” Gilden explains. And it’s about more than financial concerns. You will likely want to make sure there would be the least upset to your child’s current arrangements as possible, adds Naomi Becker Collier, Esq., of Pashman Stein in Purchase. Losing benefits can necessitate switching caregivers and disrupt your child’s routine.
Special Needs (or Supplemental Need) Trusts
Setting up a SNT for the benefit of the child with special needs is vital, says Michelle Peretz, counsel to Rivkin Radler’s Trusts & Estates Practice Group, with offices in Manhattan and Uniondale.
“By utilizing a special needs trust, you can protect the assets from claims and creditors, while retaining the disabled child’s eligibility for government services. Then the funds are used to pay expenses,” Peretz says. “Note, though, that the money in the trust cannot be given outright to the beneficiary, but [only] be used to pay expenses on their behalf.”
Try to set up a budget for your dependent’s needs, so you can get a rough estimate of what those expenses would be. “Once you have an idea of how much money will be needed for him or her, then you can evaluate how you are going to fund that need in a trust,” Collier says.
Guardians and Trustees
Consider carefully who will be the people to provide support for your child, Gildin urges. “Some adults with disabilities will require a guardian who has the legal ability to make decisions for him or her, while someone [else] may need to act as a trustee to oversee the special needs trust,” Gildin says. She encourages parents to involve their child in this planning process as much as is practical.
Trustees have complete control of the finances and assets in the SNT. Parents do not need to give this control over to one relative or close friend; they can choose co-trustees instead. Peretz recommends three: “This will avoid the autonomy associated with having one trustee appointed, and the potential for deadlocks between an even number of trustees,” she explains.
Guardians, rather than controlling the financial side of your child’s life, will make decisions such as living arrangements, doctor selection, and transportation arrangements. Although it can be helpful if a trustee is also the guardian, Peretz notes, it’s quite possible that a person perfectly suited to making financial decisions isn’t necessarily the ideal caretaker. If you do decide to split up those responsibilities, make sure the respective parties’ temperaments and perspectives on such practical matters jibe. You may love and trust both your sister and your childhood best friend, but if the two don’t usually see eye-to-eye, it may not be wise to pair them in these important roles.
Your Will, Power of Attorney, and Health Care Proxy
Your will is where you name your child’s trustee(s) and guardian. Once you decide on them, it is crucial to consult your attorney to make sure your will is executed properly, and any and all beneficiary designations are spelled out as they should be, Collier says.
A durable power of attorney appoints the individuals who can act on your behalf while you are still alive. “This is a very powerful tool to ensure that your child is taken care of should you become incapacitated,” says Nadine Gordon Lee, a certified financial planner with the Colony Group Family Offices in Manhattan and Armonk. For much the same reason, it’s smart to have health care proxies and related directives in place, she adds.
Properly Executed Life Insurance
Parents should make sure life insurance will be payable to the special needs trust, not directly paid out to the child, which could negate any government benefits due him or her. Lou Cannataro, partner at Cannataro Park Avenue Financial in Manhattan, advises purchasing separate life insurance policies for the spouse and any other children in the family. He points to “second to die” coverage as the most efficient life insurance for this type of situation. “Second to die is one policy that covers both parents. There is no payout until the second parent dies, for typically this is when the child is truly on their own.”
Planning for a child’s future is important for all parents, but for parents of a child with special needs, the conversation is taken to another level. “We all nurture and plan for our child with the hope that our responsibility wanes once they begin to build their own lives,” Cannataro observes. “For parents with a [child with special needs], this role never ends.” So, while thinking ahead to a time when you won’t be able to care for your child as you do now is unsettling, even overwhelming, the best thing you can do for your child, and your own peace of mind, is to get started now.