Planning for your financial future when you have children is important, but when one of those children has special needs, it becomes vital. Both before and after you pass away, there are a few key preparations to make in order to ensure your child has what they need as they grow up. Here is a primer to the 5 most important elements of your financial parenting plan.
Learn about Costs. As soon as you learn about your child's special situation, it's a good time to begin educating yourself about his or her future requirements. By working with your doctors, therapists, parent groups, advocates, and local school personnel, you can often get an idea of what future care will call for in financial terms. Having an objective idea of what you will need to pay for over the years will help you formulate a plan to get there.
Form a Plan for Yourself. This is not the time to DIY your finances and try to go it alone. Instead, meet with a qualified financial planner with experience dealing with family financial planning. Be open and clear about your child's long-term care needs so that the planner can help you reach your goals. But don't forget to include your other family financial needs, such as your own retirement goals, education for any other children, and future home purchases.
Create a Special Needs Trust. Work with a lawyer to implement a special needs trust in which to place money for your child's care and life expenses -- both now and later, if you prefer. Why is a trust important? Because, if a disabled individual has more than about $2,000 in assets in their own name, it may affect his or her ability to qualify for Supplemental Security Income or Medicaid benefits. Place any inherited, gifted, or other received money in this trust while you're still alive as well. Most of the time, parents are designated as the trustee to manage this money, but you will also want to name a designated trustee to take over if anything happens to you.
Write a Will. Once the trust is in place, coordinate this with your own will so that your assets will go to the trust instead of directly to your child. A will also helps reduce legal confusion and prevent any lag in between your passing away and your child receiving the benefits of your assets.
Build Savings. Beef up your own savings as quickly and regularly as possible in order to provide properly for your family. Savings provide a buffer for regular family emergencies, care and maintenance of your home, and meeting surprise challenges in your child's care or education. Insurance may not cover everything your child needs (such as therapies, treatments, or classes), so the more you have available to work with, the less stressful it will be when these challenges arise.
By following these financial steps, you can help ensure your entire family's future, no matter whether you can be there in person or not.