April 01, 2010 Caring for a child with Special Needs takes special planning. All too often, we put off the task of planning because it can be overwhelming. This article will outline some of the necessary steps you, with the assistance of a special needs financial planner and qualified attorney, need to take in order to plan appropriately and will identify some of the pitfalls in the planning process.
Letter of Intent
Did you know: Under current federal law, any inheritance of more than $2,000 disqualifies individuals with disabilities from most federal needs based assistance.
One way to get started is to compose a Letter of Intent. While the Letter of Intent is not a legal document, it is designed to serve as a roadmap for anyone involved with your child's situation to utilize in understanding your child's needs and your wishes for your child's future. This document is a working document for the future caregiver to follow.
Addressing legal issues is a crucial step in planning for the future. Prepare a will if you don't already have one or update your existing will to reflect what you want for your child. How do you want your estate to be distributed; who will be the guardian of your children?It may be especially important if you want to limit assets going directly to a child with special needs. Without a will, generally state law will distribute assets to the children.
Under current federal law, any inheritance of more than $2,000 disqualifies individuals with disabilities from most federal needs based assistance ($1,500 for Indiana Medicaid). A Special Needs Trust, however, offers a means of protecting your child's eligibility for these benefits. Design a special needs trust or update your old one.
Select a guardian and make sure you explain what is involved. You may want to consider having a guardian and trustee, each with different roles in managing your child, the money and the investments, but all being involved and contributing to their overall well being. Look at the options and decide what's best for you and your family.
Sometimes sufficient financial resources to meet needs may not be available. The death of one or both parents can jeopardize your child's financial safety net. There are a variety of funding options for Special Needs Trusts. Discuss these options with a special needs financial planner. What type of life do you envision for your child with special needs? How much money will he/she need?