By Dave Beck
Partner, Insurance Expert
Egan, Berger & Weiner, LLC
If you have a child with special needs, planning ahead for his or her financial future — especially in terms of insurance — is complex. That’s because every situation presents itself with a different set of circumstances.
Below, you’ll find an outline of a three-part process to help make it easier to develop a strategy that will work for your family.
Note: My assumptions are that you are married and that as long as either you or your spouse is alive, you can continue to support the child.
1. Legal rights: The first components are the legal considerations and paperwork that you should complete to protect your child and yourself.
- Seek an attorney: Since I am not a lawyer — and if you don’t think that’s important, I suggest you read the piece I wrote about caring for aging parents earlier this year — my help here will be minimal. My advice is to engage an attorney specializing in special needs planning, to ensure that you get the proper legal documents for your situation.
- Get your documents in order: You will likely need a Will, Durable Power of Attorney, Healthcare Power of Attorney, Letter of Intent, and possibly a Special Needs Trust — which may be required to maintain Social Security disability income eligibility, both now and into the future.
2. Financial plan: The next step is developing a comprehensive financial plan for yourself and your spouse that incorporates the costs of caring for your child, both currently and into the future.
- Determine degree of dependence: The financial planning process is one that needs to be closely coordinated with your risk management solutions. Start by determining the amount of financial support you’ll be able to provide to your child in the short-term, and in the future.
- Assess the amount of financial assistance your child will need: This should include any financial assistance that you give to your child, the cost of education (if applicable), plus the cost of the things that you do for your child on a daily basis that would need to be provided in case of your death. These include driving your child to medical appointments, balancing his or her checkbook, grocery shopping, etc.
- Keep building your assets: The greater the extent to which your child is financially dependent on you, the more important it is that your financial plan includes assets that will be able to provide that income not only now, but after your death. While you are in your highest income-producing years, it is imperative to build up as much assets as possible. After all, the future needs of your child are likely unclear. Prepare for a hurricane, and hope for a rain shower.
- Calculate financial assistance into the equation: In your retirement planning, be sure to incorporate the amount of financial assistance that you are giving to your child now, and what you expect to contribute in the future. Again, this is a guessing game, but it must be planned for in some manner so that you can determine what your retirement budget will ultimately be, exclusive of income assistance.
3. Risk management plan (aka: insurance): Tough as it is, plan for the worst-case scenario in terms of the amount of money you’ll need to save while you are working, then continue that plan into retirement, and also after your eventual death.
- Break down the process into smaller steps: Plan for the amount you’ll need to pay for your child while you are alive, after you retire, and ultimately after your death.
- Get your priorities in order: If you’re like most people, your number one financial priority is to protect your ability to earn money so you can save for your eventual retirement. That takes on special importance when you have a child with special needs because not only do you have to plan for your retirement, and your family’s financial well-being, you have to simultaneously manage the additional expenses of the child with special needs.
- Be realistic about the amount of life insurance you’ll need: It becomes imperative in this situation that you have an adequate amount of life insurance to replace lost income for your family in the event of your premature death — and that you provide adequate resources, now and into the future, for your child with special needs as well. Most often this is accomplished by a fixed-period term life policy and adequate disability income insurance.
- Income replacement and disability insurance: Life insurance is typically an income replacement calculation (number of years working, current income, interest rate, inflation, etc.). If you have a child with special needs, estimate that your disability income is at least 60 percent of your annual income. In retirement, we normally look at a policy that pays on the death of the second spouse. For example, if the husband dies first, the insurance policy pays nothing; the policy pays when the wife dies. There are two good reasons for this type of policy: It is normally cheaper than insuring the life of just one parent, and when one of the child’s parents is alive, that parent can manage to provide for the child in retirement, assuming that the parents have planned adequately during their working years.
Keep your chin up.
Planning how you’ll take care of both the legal and financial needs of a child with special needs is difficult, but not impossible. With the right legal and financial guidance, you and your family will be able to enjoy life, knowing your future is as secure as you can make it.
Book Guide: Three Tomes to Help Special Needs Children
“The Child With Special Needs: Encouraging Intellectual and Emotional Growth”
By three co-authors:
Stanley I. Greenspan, MD,
Serena Wieder, PhD, and
Stanley Greenspan, known for his work with infants, young children, and their families, and child psychologist Serena Wieder have integrated their award-winning research and clinical experience into a definitive guide to raising children with special needs. In The Child With Special Needs, they lay out a complete, step-by-step approach for parents, educators, and others who work with children with developmental problems.
Covering disabilities ranging from autism, pervasive developmental disorders (PPD), language and speech problems, to Down syndrome, cerebral palsy, and ADD, the authors offer a new understanding of the nature of these challenges along with specific ways of helping children extend their intellectual and emotional potential.
The authors first show how to move beyond labels to observe the unique profile — strengths and problems — of the individual child. Next, they demonstrate the techniques necessary to help the child not only reach key milestones, but also to develop new emotional and intellectual capacities.
Next, they provide step-by-step guidance on how to tailor the recommended techniques to each child. Finally, with a deep and compassionate understanding, they outline the typical marital, educational, and social stresses and rewards of raising a child with special needs. Learn more about the book.
“Thrive Now Blueprint: Self-Care & Success Strategies for Parents of Special Needs Children”
By Siobhán Wilcox (author), and
Anne-Marie Welsh (editor)
Thrive Now Blueprint: Self-Care & Success Strategies for Parents of Special Needs Children is an empowering and essential book for all involved in the world of special needs.
This book offers simple and easily applied tools and techniques to reduce stress levels, and to create a life of deeper self-awareness with more energy and greater well-being. This book will support parents of children with special needs who have intellectual, developmental, or physical disabilities, as well as professionals working in the field. Combining her personal experience with professional expertise, Siobhán Wilcox has created a powerful support system with this book and its companion, a comprehensive online resource exclusively for readers of “Thrive Now Blueprint,” which emphasizes:
- Creating a success mindset
- Increasing energy levels
- Building self-esteem
- Reducing stress
- Improving sleep
- Balancing nutrition
- Deepening spirituality
- Creating a unique “Thrive Now Blueprint”
Siobhán Wilcox has more than two decades of experience as a stress management expert and spiritual life coach. As the mother of two beautiful boys, one on the autism spectrum, she knows firsthand the daily challenges that parenting a child with special needs can hold. She is a speaker and has supported many nonprofits and their staff as well as parents groups. Having studied many different areas related to increasing well-being and health since 1990, she is passionate about supporting her clients to live with more energy and passion. To learn more about the book, visit SiobhanWilcox.com.
“Special Needs Education: Navigating for Your Child (A Real Life Legal Guide)”
By Lynne Williams, Esq.
Whether your child has just been diagnosed with a disability, you’re dissatisfied with the special education provided, or you want to be sure that your child with disabilities is receiving all possible benefits, this book can help you. Written by an attorney with firsthand experience navigating special education for her own child, this easy-to-understand, Real Life Legal™ guide gives you an insider’s take on what you need to do to be the best advocate for your child.
The Individuals with Disabilities Education Act (IDEA) mandates that states provide a public education that takes into account your child’s special needs, from preschool to adulthood. This guide will make it easy to understand how your child gets professionally evaluated to determine if he or she is entitled to a free, appropriate public education (FAPE), which is mandated for disabled students.
Depending on your child’s condition or illness, you may have already experienced quite a journey getting to the point of confirming a diagnosis. If you’re in a tough situation and the school district isn’t responsive, or you need to understand the administrative procedures that will impact getting your child what he or she needs and what the law requires, this book can help you.
Lynne Williams is a special education attorney assisting with mediation, due process hearings, and court proceedings. She is the parent of a child who requires special needs education and is licensed to practice law in Maine. Learn more about the book.