The financial planning process for families caring for children or adults with disabilities may seem overwhelming. We have been there both personally and professionally. To make the process easier, we break it down into what we call the Five Factors of Special Needs Financial Planning™: financial, government benefits, legal, family & support, and emotional.
Touching on each of these factors, here are some of our top tips to get you started. Since this is about planning for the future, all families of people with special needs should consider these. This is true whether or not you have a lot of money or assets right now.
1. As parents, place your own financial security first on your list of planning goals.
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Action items: Make sure your current monthly expenses are covered, develop an emergency fund (3-6 months worth of expenses if you can), and save for your retirement.
2. Preserve access to key government benefits.
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Action items: Protect eligibility for entitlement benefits such as SSI. For example, do not have more than $2,000 in your child’s name when they reach age 18. Otherwise, they won’t qualify for SSI.
3. Protect your vision for your child by putting a good estate plan in place.
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Action items: Work with a special needs attorney to write an appropriate estate plan, including a special needs trust. This will help provide for your family member’s needs after you’ve passed.
4. Check your retirement account beneficiaries.
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Action items: Check who is named as beneficiary on all life insurance, annuities, and retirement plan accounts. Make sure you do not name “children equally,” or your child individually, as the primary or contingent beneficiary, since this could affect #2 on this list.
5. Talk with your family about planning for the future.
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Action items: Bring siblings and future caregivers into the conversation. Share your plans and ask about their involvement.
6. Protect parents’ income and assets in the event of a parental death or disability.
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Action items: Have different types of coverage, such as life insurance, long-term disability insurance, and long-term care insurance, for parents and primary caregivers. Make sure medical insurance is in place for all family members. These will help protect your family from future expenses relating to the care of your child with special needs.
7. Complete a Letter of Intent (LOI).
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Action items: Help prepare siblings, future guardians, caretakers, trustees and successors by sharing the most important information about your child, and your wishes for how they should be cared for in your absence. You can download this fillable LOI.
8. Find out about guardianship and its alternatives.
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Action items: Understand and seek the best option for your family member. Consider full guardianship, conservatorship, power of attorney, power of advocacy, or other options.
9. Work with experienced professionals to do your special needs financial planning and tax planning.
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Action items: Make sure they have the right knowledge, background, credentials, and references. Use this handy “Interviewing a Financial Planner” checklist.
10. Build your “Team to Carry On.”
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Action items: While no one can replace a parent, you can plan for a team of family, friends and professionals to carry forward your vision for your child with special needs. Identify and work with potential trustees, guardians, caregivers and support services to put that team in place today.
The Special Needs Financial Planning Team at Shepherd Financial Partners
Cynthia Haddad, CFP® | John Nadworny, CFP® | Alex Nadworny, CFP®
Special Needs Financial Planning is a specialty practice of Shepherd Financial Partners. Financial planning and investment advice offered through Shepherd Financial Partners, LLC, a registered investment advisor. Securities offered through LPL Financial, Member FINRA/SIPC. Special Needs Financial Planning, Shepherd Financial Partners and LPL Financial are all separate entities.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
