Financial Planning for “Kids with Special Needs”

As we worry out loud about how we’ll pay for our kids' college education, the parents of children with special needs have worries that extend much beyond these

How will we pay for the special therapies our child needs now?

Who will pay our child's expenses once he or she becomes an adult?

Where will our child live and who will oversee his or her care after we're gone?

I am sure these questions and fears must be worrying. But we as financial planners say that creating a plan can ease anxiety. Some of the issues you need to confront are financial: How do you and how much money do you set aside for your child? And some are emotional: Who would understand your child's needs if something were to happen to you right now?

Here are some important steps to plan your child's financial future. Some are simple, some are challenging; some cost nothing and some require paying legal fees. Get started on some of these now, so you'll have peace of mind down the road.

1.     Create a Special Trust

A special trust is the most important part of your child's long-term financial plan. This is where you can put money that you save, that others give your child as gifts, or that you receive from an insurance settlement. This way, you can make the trust the beneficiary of your life insurance policy and your estate, ensuring that those assets don't get passed to your child’s personal account when you die. Since the child is special it will be almost impossible to transact on monies coming in his/her personal account.

Even if you're unable to pay into a trust right now, set one up anyway.

2.     Write a Will

A will specifies what will be done with your assets after your death. By writing a will, you make sure that your assets are left to the special trust and not to your child. Without a will, a probate court judge could name your child as a beneficiary, which could make things more complex. The will is also where you can specify a guardian who will take care of your child.

When you have a child with special needs, a will should not be a do-it-yourself endeavour. Hire a lawyer who works specifically for people with special needs and is aware of your countries disability laws. Once the documents are drafted, have your lawyer keep one and then give copies to any executors or guardians named in the will.

3.     Name a Guardian

A guardian is the person who will care for your child if you were to die before he or she becomes an adult. In choosing this person, consider how much time you now spend tending to your child's needs. Who can handle that type of commitment? Who has bonded with your child? Who has the patience, understanding, and other personality traits necessary to deal with the day-to-day responsibilities of raising your child?

Once you pick someone, ask the person if he or she can and will accept that responsibility (even though you hope it will never be necessary). And talk about how this commitment will likely stretch beyond when your child turns 18.

4.     Name a Trustee

A trustee is the person who will be responsible for managing the special trust after your death. It can be a family member, a friend, an independent professional trustee, or even a bank or lawyer. The trustee ensures that the money in the trust is spent only on your child with special needs and only on services that you've specified or that are appropriate to your child's needs. The trustee also supervises how the money in the trust is invested. The person who is caring for your son or daughter (the guardian) cannot spend any money in the trust without the trustee's approval.

And a word on trustees and guardians: They often are not the same person, and we recommend that they never be the same person. By separating these roles, you ensure a "checks and balances" system for your child's future needs.

5.     Build Your Savings

Your personal savings are so important. Start putting aside whatever you can each month — no amount is too small — Sit with a knowledgeable and mature financial advisor to build corpus bringing you growth, safety and liquidity together.

6.     Write a Letter of Intent

Preparing for your child's financial future is important. But hand-in-hand with that is making sure that your child's everyday needs will be met should anything happen to you. That's where a Letter of Intent comes in. Is your child's daily routine very important? Write it down and be as detailed as possible. The same goes for your child's daily, weekly, and monthly schedules. Also include things that your child likes and dislikes, and helpful resources in the community.

Create a list of contact information for your child's physicians, therapists, and other medical support people as well as current medications and their dosages and schedules. Are there people you don't want around your child or activities to be avoided? Write that down too.

And then once a year, update the letter. This is not a formal legal document, so you can draft it yourself. Keep a copy wherever you have copies of your will. And make sure that your child's appointed guardian has a copy too.

7.     Apply for Guardianship or Power of Attorney

Once children turn 18, they're considered adults in the eyes of the law. This gives your child the right to make medical and financial decisions. If he or she is not capable of this or needs your guidance, consider assuming legal guardianship or the less-restrictive power of attorney and health care proxy for his or her financial, legal, and health care affairs. This way you maintain the same supervision and control you had over these as you did when your daughter or son was younger.

We advise parents to hire an attorney to help with this process. This will ensure that you have all the powers you would need to assume control of your adult child's health care in the event of an emergency.

8.     Need Help? Find an Advisor

If all of this is too overwhelming, a certified financial planner can help.

In case you need help and guidance in this subject. Contact Veena Malgonkar (first lady certified financial planner in India)  Handphone:- 09371000599