I remember several movies in my childhood where a family had a child they didn’t want people in their community to know about. They were movies like The Goonies and Powder. The “embarrassing” kids in those movies were kept out of public view and even locked away. Now obviously these were plot lines meant for entertainment value, but they touched on a very real topic that I never seriously thought about until recently. Recently, I began to have more and more clients who were parents of special needs children and they were unaware of the specialized planning that they needed to do. The black community has been very “hush hush” about having special needs children in our families and it has been to detriment of those children. I totally understand some parents may be embarrassed that their child isn’t considered “normal” or maybe they are just being very protective of a child in world where other kids can be cruel to disabilities they do not understand. However, there are some serious financial and legal issues requiring planning that parents of special needs children have to be aware of. I touched on these points during my weekly radio segment on 106.7 and I want to expand on them here.
Parents of children with physical, mental, or emotional disabilities devote countless hours to caring for their special needs. Parenting a child with special needs requires that you trust many doctors, teachers, therapists, and care providers to give you and your child the best advice at the right time. You must also trust yourself to make decisions that could impact your child’s future comfort, care, and development. Concerns about the future are very real. Where will your child live after you and your spouse are no longer alive? Who will care for your child, and where will the money come from? Fortunately, help is available with local, state, and Federal programs easing some of the monetary demands on the family.
In addition, there are private groups that can help with long-term care. If you wish to provide the highest level of care, however, you will need to plan for the best possible use of your funds. A document that may be most helpful for families needing to make provisions for a child with special needs is a special needs trust. This device would allow a trustee, typically a family member familiar with your child’s needs, to use funds placed in a trust by you, for the necessary care. It offers sufficient flexibility to handle almost any situation, while providing privacy in the details of the arrangements made by parents, grandparents, or others who wish to make a gift to a child with special needs. While you may feel that trusts are only for the very wealthy, the financial situation of a family with special needs require prudent life care planning to prevent loss of agency funding after the parents are gone. For example, assets received as an inheritance might disqualify an adult child from receiving public funds for housing, medical care, and other government programs. Assets placed in a properly drafted trust, however, and directed to uses other than those available through government sponsorship, remain available for the individualized care a parent might wish to provide. What Steps Should You Take? With the guidance of a financial advisory team made up of an attorney, CPA, and other financial professionals that specialize in working with families with special needs, the first and most important step is to explore the types of third-party trusts suitable for your situation. Then, establish a trust to benefit your child with special needs. Part of this task will be to choose a trustee. Many families choose either a trusted friend or family member, but you also want to consider some available options; you may decide to appoint three people to administer the trust. This reduces the burden on all and allows for discussion to help ensure the best care possible. Also integral to the establishment of the trust is to change all beneficiary forms—directing proceeds of pensions, life insurance, Individual Retirement Accounts (IRAs), and other assets that you wish to commit to the future care of your special needs child—to the trust rather than to the child. To ensure adequate funding of the trust, assess your personal insurance picture, including long-term care, catastrophic health-care, major medical, and life insurance.
Finally, keep a “Personal Needs Notebook” in which you record all aspects of your emotional and monetary support, physical care, family members, friends, and advocacy groups involved with your child. Replacing the love and care you give to your child with special needs may be impossible, but providing for a future filled with support and competent care is within your grasp. Planning now for the time your child must go on without you can be one of the greatest gifts of love you have to give. Let’s not let embarrassment or being overly protective keep us from what is smart planning for the long term.
Feel free to contact me if you have questions and want more information.
K. Orian Williams, J.D.
Financial Services Professional
Fleur de Lis Financial an agency of Mass Mutual Financial Group
One Galleria Boulevard
Metairie, LA 70001
The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.