No matter how old they are, it can be frightening to imagine your children’s lives without you. However, when your child has special needs, it becomes much more important to ensure he or she has a lifetime of support and care.
Let’s review a few key steps you can take today to lay the foundation for your child’s future.
Laying the foundation for the future
Ironically, the process of special needs planning starts with a document that is not financial in nature. An important starting point of the financial planning process is a Letter of Intent [hyperlink]. This document details your child’s functional abilities, routines, interests, particular likes and dislikes, specific doctors, services and resources, as well as your hopes and dreams for his or her future. This document provides the foundation to build a financial plan.Once the foundation is in place, it is best to start the financial planning process by examining your entire financial picture. A financial advisor can help you use your existing resources to put together a holistic financial plan that sustains the lifestyle of your entire family, now and after your death.
Professional guidance matters
Building on the foundation in place for your child’s future means having the proper legal instruments to reduce or eliminate any complications in transferring funds or assets to your child after your death. A financial advisor and an attorney skilled in serving people with special needs, can help you ensure that benefits and your estate transfer and do not end up jeopardizing your child’s eligibility for essential government benefits.Here are some things a financial advisor will help you consider:
- Special needs trusts (SNT) – There are many types of SNTs so you’ll want to select the one that’s most appropriate for your situation. State laws governing the naming of trustees can vary, so it’s good to have expert legal guidance to explain the differences.
- Wills – Your child’s SNT should be named as the beneficiary for any assets you leave him or her in your will. If you create an SNT for your child and your will leaves assets to him or her through that trust, his or her government benefit eligibility will not be affected due to an increase in assets.
- Policies and accounts with beneficiary options – Check all policies and accounts you own, including any employee benefits, to ensure your child is not directly named as a beneficiary or subsequent beneficiary.
- Guardianships – Once your child reaches the age of majority—the age recognized by law when a minor is considered an adult, generally 18—and is unable to make his or her own medical and financial decisions, naming one or more individuals (or a professional) can serve as a safety net. A thoughtfully appointed guardian can offer you the assurance that certain aspects of your child’s life will be handled with your child’s best interests in mind.
- Powers of attorney (POAs) and medical directives – If a guardianship isn’t established for your child, these legal documents can give legal authority to trusted individuals to make medical and/or financial decisions on your child’s behalf.
- Social Security benefits – If your child receives Supplemental Security Income (SSI) benefits (or may in the future), having an SNT will help preserve his or her eligibility. There are also a variety of other needs-tested and entitlement-based benefits and programs offered.
In addition to financial and legal options to consider, there are personal care considerations that can be communicated through a Letter of Intent. Who’ll give your child the time and attention you do? You can certainly make every effort to choose the right people – those with expertise, time, and heart – who’ll, in turn, make every effort to care for your child.The resources you provide them will help.
- Caregivers, guardians, and trustees – Take time to decide who are the best people to provide personal, medical, and financial care and guidance to your child when you are no longer able to. It is wise to name multigenerational contingent designees, as well, to avoid your child outliving his or her caregivers, guardians, and trustees. Then meet with them to discuss your request.
- Letter of Intent – In addition to setting the foundation of your financial plan, this comprehensive document contains both historical and current personal, social, medical, and financial information about your child that any caregiver, whether a professional or a family member or friend, can use to fully understand how to best care for your child. It can also be practical to periodically share this document with family members, future guardians and contingent trustee(s) of your child’s SNT.
An important part of creating a lifetime of care is developing a vision for when you’re no longer able to physically provide for your child. Thinking ahead and creating a plan can help protect your child’s future while offering you additional peace of mind today.It’s never too early or too late to have conversation with a financial advisor to help you along your journey.
Neither Voya nor its affiliated companies or representatives provide tax or legal advice. Please consult a tax adviser or attorney before making a tax-related investment/insurance decision.Products and services offered through the Voya family of companies.