Biggest Mistakes Parents Make When Planning For A Child With Special Needs

  • Assuming Special Needs Planning is only necessary for those individuals with profound challenges.

If your loved one is high functioning, or in the ‘gray area’, you need to ask yourself…

  • Without your continued support, will they be able to live at a standard of living you would want for them?
  • Will they be capable of consistently maintaining a job at a level where they would be self-sufficient?
  • Is there the chance you may need to financially supplement their income throughout their life?
  • Will they be vulnerable to predators or creditors?
  • Would they benefit from having some level of financial guidance?

If you answered ‘yes’ to any of these questions or are simply unsure, then the process of Special Needs Planning can only help your loved one.  A Special Needs plan can provide the support structure to help protect your child in your absence.   

  • Assuming planning does not need to be completed until a child is turning 18 and is eligible for benefits.

Special Needs Planning is not age specific, and should not be a process driven by an often urgent need to rearrange a child’s finances so they may qualify for benefits at age 18.  Just as all parents should plan for the future of their typical child(ren) when the parent(s) are no longer here, the need to plan for a child with special needs is typically more critical and often far more complex.  In addition to the costs of raising a typical child who will eventually be independent, greater funding is often required for a child with special needs to cover the cost of medical expenses, therapies, specialized child/adult care, etc.  More importantly, these costs may be lifelong.

  • Failure to complete and communicate a Special Needs plan.

Once all of the legal work is complete, including wills, Power of Attorney, Health Care directives, and the appropriate Special Needs Trust, there are still steps that need to be taken.  While a Will directs where our personal assets will pass to, it does not provide direction for retirement plans (IRA, 401K, 403B, etc.), annuities or life insurance.  These assets pass by beneficiary designation.  These beneficiary designations need to be updated regularly to reflect your goals.  While most people who are married will name their spouse as their primary beneficiary, they typically will name their children as the contingent or secondary beneficiary.  This can be catastrophic for families that have children with special needs.

In addition, it is very important to communicate a Special Needs Plan to other family members.  It is possible that a well-meaning, but otherwise misinformed relative may leave assets directly to your loved one, either intentionally or unintentionally.  This again could disrupt a well-designed plan.

  • Having assets in your child's name.

In most states, when your child turns 18 they cannot have more than $2,000 in their name, or they will not be eligible for government benefits such as Medicaid (supported living, day programs, health insurance, etc.) or Supplemental Security Income (SSI) which in 2016 should amount to $733/month.  In the state of CT, the limit your child can have to qualify for Medicaid benefits is $1600.  It is extremely important you are aware of these asset limits, and plan accordingly so as not to jeopardize your child’s eligibility for these very crucial benefits today or in the future.

  • Assuming that having a Special Needs Trust is sufficient.

“My child has a Special Needs Trust, so we’re all set.”

This often occurs when a family sees an attorney without the guidance of a financial advisor who has experience with Special Needs Planning.  It is important to explore funding strategies that will ensure there will be sufficient resources available to continue the lifestyle you want for your child in your absence.

Quite often, some form of permanent Life Insurance is utilized as a financial tool to ensure adequate funding of the Special Needs Trust once both parents are deceased.  Remember, a Special Needs Plan without adequate funding in place can be little more than an empty promise.

  • Failure to consult and work with the proper advisors.

In order to receive the proper advice and direction throughout this highly specialized planning process, it is critical to work with a proficient team that understands the unique needs of your loved one.

  • Assuming government benefits will be sufficient.

In light of the continuing budgetary cuts to social services, both on the state and federal level, it would be risky to assume future government benefits will be sufficient to maintain your loved one’s quality of life.  As it stands today, government benefits merely provide bare bones necessities for many individuals.

  • Disinheriting your child with special needs.

It is not uncommon for families to be instructed by otherwise well-meaning individuals or advisors to ‘disinherit’ their child with special needs in order to preserve the child’s eligibility for government benefits.  Remember, these public benefits rarely provide for more than just the ‘bare bone’ necessities.  Families are then told to leave their assets to their typical child, and have them ‘take care of’ their sibling with special needs.  We refer to this as a morally obligated gift.

What if your typical child is sued?  Divorces?  Has financial problems?  Becomes ill or passes away before their sibling with special needs?

In all of these circumstances, the assets you left for your child with special needs will be completely unprotected.  A properly drafted Special Needs Trust can be an alternative solution. 

  • Failure to have a will.

The truth is, we all do have a Will.  The question is who created it…you or your state?  If you did not create it, the state has one waiting for you, and one thing you can be sure of is that it will not be in the best interest of your child with special needs.                                                                         

  • Procrastination.

Merriam-Webster dictionary defines procrastination as “putting off intentionally the doing of something that should be done.” 

We understand that the challenges of life with a loved one with special needs can be all-consuming.  We will walk beside you as you navigate the journey of Special Needs Planning.  Given the current fiscal landscape of the federal and state governments, proactive planning is increasingly important.

Please take the opportunity to educate yourself and make informed decisions for your child.  It will bring a sense of relief to know that a well thought out plan is in place for your child’s future.   (back to top)