By Bennett Whitlock, CRPC®, Private Wealth Advisor
If you’re a parent of a child with special needs, you’ve likely dedicated much of your life to researching, providing and advocating for the best care for your child. So naturally, you may worry about what will happen when you are no longer able to supervise your child’s care due to declining health or death. Fortunately, there are steps you can take to help ensure your child has sufficient financial resources along with a dedicated support system. Here are six areas to plan for to help protect your child’s future.
- Include your child in the process. To the extent you’re able, talk with your child about his or her future. If employed, is her job sustainable for the future? Does he feel comfortable managing everyday finances? Where does she naturally turn to for support? Understanding your child’s wishes and being realistic about his or her abilities will help you craft a long-term support strategy.
- Provide guardianship and decision-making support. If your child needs support making financial, legal or medical decisions, it’s important to obtain guardianship and/or conservatorship from the courts. With this authority granted, you can designate who should have this responsibility when, and if, you are no longer able to fulfill the role. Communicate early and often with the family members or delegate who will oversee and provide support for your child’s care so that they know what to expect. It’s important for your delegate to know what decisions your child can make independently and where he or she may need some assistance.
- Create an estate plan. Establishing an estate plan is key to ensuring your wishes are followed and may help your heirs avoid probate court. Ask your financial advisor and estate planner to help you include protections for your child within your estate plan. Provide care instructions in the event of your death or if an accident leaves you unable to manage your child’s care.
- Save strategically. A tax-advantaged ABLE account, created by the Achieving a Better Life Experience Act in 2014, is one way to create a financial cushion. Earnings grow tax deferred, and funds can be withdrawn tax-free if they’re used to meet qualified expenses for your child. The law defines “qualified expenses” broadly, allowing funds to cover the costs of health care, assistive technology, housing, education, legal fees or personal support services. Anyone can contribute to
the account. Your financial advisor can help you determine if your child meets eligibility requirements and review annual contribution limits to help you maximize this resource.
- Set up your inheritance. If you’d like to leave money to provide for your child, consider if establishing a special needs trust makes sense for your situation. Simply naming your child as a beneficiary in your estate could compromise his or her eligibility for government benefits, such as Supplemental Security Income (SSI) and Medicaid. There are several types of trust accounts that allow your child to maintain government support, often by providing funds directly to a care service or through a trustee. There are advantages and considerations for each option, so consult your attorney for guidance.
- Research living arrangements. If your child is still living at home, explore housing options that will provide a safe environment tailored to his or her abilities. Researching your options is crucial, even if you intend for your child to reside with a sibling or another family member. Circumstances, such as divorce, job loss or illness, could prevent the family member from providing the level of care your child needs and deserves.
By addressing the areas above, you can feel more confident that your adult child will be well cared for no matter what happens in the future.
Bennett Whitlock, CRPC ®, is a private wealth advisor and managing director with Whitlock Wealth Management, a franchise of Ameriprise Financial Services Inc. Learn more at WhitlockWealth.com or call 703-492-7732.